Best REITS For Reliable Income: September 2023

best reits for income

If you want to sleep well at night when times get tough, this is a great name to own. The high yield REITs in this article are a great place to start for anyone that wants to create a dividend-focused investment strategy. Of their properties, LTC (which stands for long-term care) is split between senior housing and skilled nursing facilities.

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At 0.12%, it’s more than 50% below the industry average of 0.24%. Generation Income also announced it had closed its $42 million acquisition of a 13-property portfolio from Modiv Industrial Inc. On July 25, Brandywine Realty Trust released second-quarter operating results.

It focuses on both commercial and residential properties to maximize opportunity. Although its shares aren’t performing particularly well right now, there’s plenty of potential for a rebound. The REIT contains 2,738 different properties in all but one state in the U.S. The Realty Income Corporation owns more than 6,700 buildings in every U.S. state, Puerto Rico, and the United Kingdom.

Investing in REIT ETFs

AvalonBay is a giant in the industry ($30 million market cap), with a big city, coastal focus. These historically strong markets have started to bounce back from the pandemic’s hit, even though investors were worried about a population shift to less dense areas. The next name in our lineup is AvalonBay Communities (AVB 1.92%), one of the largest apartment landlords you can buy. The dividend yield here is 2.8%, again near the low end of the REIT’s historical yield range.

best reits for income

If you want stability, you invest in slow-growing, mature companies. If you want fast growth, you accept the potential for higher volatility. Even halfway through the first quarter, there isn’t a strong indication which direction markets will go. If you have a spare room, you can use it to jump-start your real estate empire (or just earn enough to take a vacation next year).

STAG Industrial (Dividend Yield: 3.8%)

Real estate investment trusts (REITs) are one of the most popular options for investors seeking regular income. A real estate investment trust must distribute more than 90% of its earnings each year in order to maintain its tax-free status. For investors, that means relatively high dividend payments and consistent dividend policies. Investors looking for regular passive income will find dividend-friendly real estate investment trusts to be a great option.

You may have a vision of what you want your home to look like, but you might save some money — or make a bigger return on your investment — if you let go of that white picket fence in your head. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only.

Rising rates pushed prices of several well-run REITs lower. If you’re looking for reliable dividends, now is the time to act.

REITs widely offer higher dividend yields than the average stock. Here are the top five REITs, according to Ben Reynolds whose team at Sure Dividend has launched a service that ranks more than 110 REITs each month. That uncertainty may play well for real estate investment trusts (REITs), which own and finance real estate. Most also pay their shareholders generous cash investment income.

However, after the loss that Apollo experienced during the recession of 2009, investors should create a broadly diversified portfolio if they consider this option. Apollo Commercial Real Estate Finance is a real estate investment trust that invests in debt securities and commercial real estate-related debts. Crowdfunding platforms such as FundRise (residential) or Cadre (commercial) allow investors to own a small portion of a diversified portfolio, typically yielding 10-12% annual returns.

  • The company also owns four championship golf courses in Indiana, Mississippi, and Nevada.
  • These historically strong markets have started to bounce back from the pandemic’s hit, even though investors were worried about a population shift to less dense areas.
  • EPR Properties typically rents its properties using triple net leases with operational, maintenance, insurance, and tax costs borne by its tenants.
  • Payout is exceptionally modest for a REIT, sitting around the mid-50% area.

VEREIT is an exception because all of the executives responsible for the accounting snafu have long since been fired. New management, led by CEO Glenn Rufrano, is squeaky clean and far less aggressive. This team is interested in slow, steady growth customer orientation examples – the proverbial tortoise vs. the hare. Healthcare Trust of America offers a respectable yield near 4% at current prices. That’s lower than some of the other REITs on this list, but that’s acceptable in light of HTA’s lower risk profile.

His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others. Investors should be sure to understand their costs and how they operate before buying shares. Normally, they’re taxed as ordinary income at an investor’s tax bracket rate. It also invests in some residential and commercial mortgage-backed securities that are not government-guaranteed. Here are a half-dozen REIT prospects, each specializing in a different niche of the real estate sector. Because of that, an investor needs to carefully consider the safety of a REIT before buying shares.

Blackstone Mortgage Trust

It trades below its long-term moving averages, but then this may be a blessing in disguise. Isn’t it wiser to buy stocks when they’re cheap instead of the other way around? While 2020 was a difficult year for most healthcare REITs due to the pandemic, it was a big year for Medical Properties Trust.

  • REITs are companies that make money by leasing buildings to tenants.
  • High-yield REITs have become a commodity in income investors’ portfolios.
  • Medical office tenants also have far fewer problems with uninsured patients than hospitals and far less regulatory risk than nursing homes.

It should be noted that Ryman Hospitality Properties, Inc. suspended its dividend in the wake of the pandemic. The last dividend payment the company made was on April 15, 2022, which amounted to $0.95 a share. However, the recovery should bring back the dividend sooner rather than later, and patient shareholders could be rewarded handsomely. It is too soon to tell what the dividend yield will be once it returns, but investors can expect it to be somewhere in the neighborhood of 5.0% to 10.0%.

It has managed to grow its funds from operations per share by 11% per year since 2001 – far better than the rates of Welltower (HCN) and HCP (HCP), its biggest rivals in the health care space. But its dividend still accounts for only 82% of its adjusted funds from operations (AFFO), and this is after the company reported a lousy quarter with a temporary decline in AFFO. About 18% of its portfolio is in convenience stores, with full-service restaurants and limited-service restaurants making up another 12% and 8%, respectively. From there, the industry concentration starts to drop off, with no other industry amounting for more than 7%. Its largest is gas station chain Sunoco, at a modest 5.2% of the portfolio. To start, REITs are incentivized by the tax code to pay outsize dividends.

The portfolio is well-diversified, spanning 207 properties run by 29 operators in 28 states. And like many of the other stocks recommended today, the properties are rented with triple-net leases, meaning that taxes, maintenance and insurance are paid by the tenants. Once the properties are up and running, LTC does little more than collect the rent checks.

Realty Income is the largest net lease REIT, which is both good and bad.

An expanding P/E multiple could boost shareholder returns by 4.3% per year over the next five years. When the 5.0% earnings growth and 5.3% dividend yield are also added, we expect total annual returns of 13.4% per year over the next five years. Despite the pandemic, Alpine has raised its dividend 22% this year and thus it is offering a 5.3% dividend yield. However, given the healthy payout ratio of 68%, the reliable cash flows backed by multi-year leases and growth potential, the dividend should be considered safe in the absence of a prolonged crisis. Based on estimated fiscal 2021 FFO of $1.49, CareTrust trades for a price-to-FFO ratio (P/FFO) of ~14.6.

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There are enough REITs out there so you can tailor your portfolio to your comfort zone. The REITs shown in the table below outperform that index, with yields ranging from 4.48% to 10.8%. Many or all of the products featured here are from our partners who compensate us.

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