Tuesday, August 9, 2022

5 High-Yield REITs With Growing Dividends

U.S. REITs were created in 1960 by Congress as a way for all investors to have access to large-scale, income-producing real estate. To qualify as a REIT, the trust must comply with IRS rules. These rules include: 1) distributing annually as dividends at least 90% of its taxable income, 2) investing at least 75% of its total assets in real estate and 3) deriving at least 75% of gross income from real estate.

The 90% distribution requirement along with no corporate income taxes are two reasons REITs yields are often above average. However, it is important to note that since REITs pay no income tax, their dividends are not eligible for the special treatment as a "qualified dividends", which are normally taxed at 15%.

When comparing REIT yields to investments with qualified dividends, you must always look at them on an after-tax basis. REITs trade on major stock exchanges and have become immensely popular since their introduction.

This week, I screened my dividend growth stocks database for REITs with a yield at or above 4% and have increased their dividends for at least 10 consecutive years. The results are presented below:

Realty Income Corporation (O) is an equity real estate investment trust that owns, develops and manages retail real estate, primarily single tenant buildings throughout most of the U.S. The trust is also among a handful of REITS that pay monthly dividends. Yield: 4.0%

Federal Realty Investment Trust (FRT) is an equity real estate investment trust that specializes in the ownership, management and redevelopment of community and neighborhood shopping centers, primarily in strategically selected metropolitan markets in the Northeast, Mid-Atlantic, and California. Yield: 4.0%

National Retail Properties, Inc. (NNN) is an equity real estate investment trust that invests in high-quality, freestanding retail properties subject to long-term net leases with major retail tenants.Yield: 4.7%

W. P. Carey Inc. (WPC) is a leading global net-lease REIT that provides long-term sale-leaseback and build-to-suit financing solutions for companies worldwide. Yield: 4.9%

Universal Health Realty Income Trust (UHT) is a real estate investment trust (REIT) that invests in healthcare and human service related facilities. Yield: 5.3%

As with past screens, the data presented above is in its raw form. Some of the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 150+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long O, NNN, UHT,

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Tags: O, FRT, NNN, WPC, UHT,