5 High-Dividend REITs to Buy Now
By: Ned Piplovic,
High dividend REITs offer investors an easy way to invest in the real estate market and collect a steady flow of above-average dividend income distributions.
To take advantage of tax laws that allow real estate investment trusts (REITs) to pay no corporate income taxes, REITs must distribute at least 90% of their earnings as dividends. These regulations offer an incentive, and REITs generally tend to offer high dividend yields.
REIT units trade on major exchanges, which makes REITs very convenient and easy real estate investments. Furthermore, the high liquidity of REITs allows investors to divest their stock positions easily and convert their positions into cash or other investments.
While investors seek high dividend yields, at least minimal asset appreciation must accompany the high yields to ensure positive total returns. A rising or a high dividend yield could be a result of a stock price decline. Since stocks experience a much higher degree of volatility than dividend payouts, a falling share price can easily overcome a rising dividend and deliver total losses while driving the dividend yield higher.
Therefore, all five of the high dividend REITs on the list below also have double-digit-percentage total returns over the trailing 12 months, as well as three year total returns of at least 20%. Despite the importance of total returns, the five high dividend REITs below are sorted by their current dividend yields in ascending order.
5 High Dividend REITs to Buy Now: #5
CorEnergy Infrastructure Trust, Inc. (NYSE:CORR)
CorEnergy Infrastructure Trust, Inc. is a real estate investment trust (REIT) that owns critical energy assets, such as pipelines and storage terminals, as well as transmission and distribution assets. CorEnergy collects revenues through long-term contracts with operators of the REIT’s assets.
The REIT’s current quarterly distribution of $0.75 converts to a $3.00 annualized payout and a 6.4% forward dividend yield. This yield is 70% higher than the 3.8% simple yield average of the entire Financial sector. Additionally, CorEnergy’s current yield is also 62% higher than the 3.96% yield average of the company’s peers in the Industrial REITs industry segment, as well as 46% above the 4.4% average yield of only the segment’s dividend-paying equities.
Since the initial distributions in 2013, the REIT enhanced its dividend payout 20%, which is equivalent to a 3.1% average annual dividend growth rate over the last six years. The share price tripled since hitting its all-time low in February 2016. Just since the beginning of 2019, the share price has advanced 43% and has reached its 10-year high in August 2019, before pulling back slightly to the current level.
The combined effect of the steep capital gains and rising dividend distributions, rewarded shareholders with a 35% total return over the trailing 12 months. A price decline prior to the 2016 bottom limited the five-year total return to 75%. However, shareholders nearly doubled their investment over the past three years with a 92.4% total return.
5 High Dividend REITs to Buy Now: #4
Sabra Health Care REIT, Inc. (NASDAQ:SBRA)
Sabra Health Care operates as a REIT that owns and manages 432 health care properties, such as skilled nursing and transitional care facilities, senior housing communities, specialty hospitals and other health care facilities. Including one joint venture, the REIT’s total capacity exceeds 50,000 beds across all its facilities.
The REIT’s current $0.45 quarterly distribution corresponds to a $1.80 annual payout and a 7.8% forward dividend yield, which is 3.6% higher than the company’s own 7.5% dividend yield average over the last five years. Additionally, Sabra Health Care’s current yield is also more than double the 3.8% average yield of the entire Financial sector, as well as 80% higher than the simple average yield of the company’s peers in the Health Care Facilities REIT’s industry segment.
The REIT’s share price experienced moderate volatility, which included a 36% decline during the overall market correction at the end of 2018. However, since reversing direction at the beginning of 2019, the share price has advanced 45%, regained all those losses and delivered a 5% one-year gain. This capital gain and the dividend income combined for a 12% total return over the trailing 12 months. Despite the share price decline between mid-2017 and late 2018, the three-year total return exceeded 20%.
5 High Dividend REITs to Buy Now: #3
Whitestone REIT (NYSE:WSR)
Whitestone is a community-centered retail REIT that owns and manages “e-commerce resistant” retail centers principally located in Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. The REIT’s mix of national, regional and local tenants offers daily necessities, needed services and entertainment.
The company has been paying a $1.14 flat annual payout since beginning dividend distributions in 2010. This annual payout is equivalent to an 8.3% forward dividend yield. While 3% below its five-year average, the current yield is 120% higher than the 3.8% average yield of the entire Financial sector and 45% higher than the 5.75% yield average of the Diversified REITs industry segment.
The share price has advanced nearly 40% since its five-year low in March 2018 and almost 20% since its 52-week low in March 2019. This asset appreciation combined with the steady dividend income for a total one-year return of more than 12% and 31% total return over the past three years.
5 High Dividend REITs to Buy Now: #2
Arbor Realty Trust, Inc. (NYSE:ABR)
The Arbor Realty Trust enhanced its quarterly payout 3.6% to $0.29 from the $0.28 amount in the previous period for the most recent pay date in early September. This new dividend distribution amount is equivalent to a $1.16 annualized payout amount and yields 8.8%. The current dividend yield is also 3.2% higher than the company’s own 8.5% average yield over the last years.
Arbor Realty’s current 8.8% yield is more than double the 3.8% simple average yield of the entire Financial sector. Additionally, the REIT’s current yield is also 53% above the 5.75% yield average of the company’s peers in the Diversified REITs industry segment. Furthermore, Arbor Realty’s current yield also outperforms the 7.8% simple average yield of the segment’s only dividend-paying equities by more than 12%.
In addition to a steady dividend income, Arbor Realty has rewarded its shareholders with robust asset appreciation. Over the trailing 12 months, the company has delivered a total return of nearly 24%. Additionally, the shareholders more than doubled their investment over the past three years with a total return of 118%. Furthermore, total returns over the last five years are approaching 170%.
5 High Dividend REITs to Buy Now: #1
Ellington Financial, Inc. (NYSE:EFC)
Founded in 2007 and based in Old Greenwich, Connecticut, Ellington Financial, Inc. acquires and manages residential mortgage-backed securities backed by consumer and government-backed loans. The company also provides collateralized loan obligations, mortgage-related and non-mortgage-related derivatives, equity investments in mortgage originators and other strategic investments. Ellington Financial switched to operating as a REIT in January 2019.
The company’s current $0.14 monthly dividend distribution corresponds to a $1.68 annualized payout and a 9.2% forward dividend yield. This yield outperforms the 3.8% simple yield average of the overall Financial sector by more than 140%. Additionally, Ellington Financial’s current yield is also nearly 22% higher than the 7.6% average yield of the Mortgage Investment industry segment.
After a three year decline, the share price declined to its all-time low at the beginning of the trailing 12-month period. However, since bottoming out in late December 2018, the share price has gained more than 22%. This asset appreciation combined with the high dividend yield for a total return of more than 28% over the last year and nearly 50% over the last three years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.