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If you’re looking for dividend income from your investments, don’t overlook real estate investment trusts. REITs are companies that typically own real estate investments that produce income, such as shopping centers, apartment buildings and industrial parks. Some REITs invest in residential or commercial mortgages and related assets. Investing in a REIT lets you own real estate without having to purchase and maintain properties yourself.
REITs often pay dividends, sometimes significant ones. This is a benefit for investors who are looking for income from their investments, in addition to price appreciation. A properly managed REIT portfolio can provide an ongoing stream of income.
Which REITs Pay High Dividends?
Here are some high-dividend REITs that are worth considering in 2023:
- PennyMac Mortgage Investment Trust — Dividend yield: 13.52%
- Armour Residential REIT Inc. — Dividend yield: 19.83%
- Apollo Commercial Real Estate Finance Inc. — Dividend yield: 13.74%
- Chimera Investment Corp. — Dividend yield: 18.85%
- Medical Properties Trust Inc. — Dividend yield: 14.68%
- Office Properties Income Trust — Dividend yield: 14.10%
- VICI Properties Inc. — Dividend yield: 4.94%
- Gaming and Leisure Properties Inc. — Dividend yield: 5.85%
Mortgage REITs
Mortgage REITs invest in residential and/or commercial mortgages and, in some cases, mortgage-backed securities. They rarely, if ever, own or manage property themselves.
1. PennyMac Mortgage Investment Trust
PennyMac Mortgage Investment Trust (NYSE: PMT) invests in residential mortgages, mortgage servicing rights and mortgage-backed securities, as well as hedge investments that relate to these. The company works with prime credit quality loans that are newly originated.
PennyMac has a forward dividend of $1.60, with a yield of 13.52%. Shares closed at $11.74 on May 23 and have traded between $10.78 and $16.60 over the past 52 weeks.
2. Armour Residential REIT Inc.
Armour Residential REIT Inc. (NYSE: ARR) invests in residential mortgage-backed securities that are issued or guaranteed by Fannie Mae or Freddie Mac or are guaranteed by Ginnie Mae.
Armour Residential REIT has a forward dividend of $0.96, yielding an eye-popping 19.83%. That said, it closed at $4.84 on May 23, near the low end of its 52-week range of $4.38 to $7.98.
3. Apollo Commercial Real Estate Finance Inc.
Apollo Commercial Real Estate Finance Inc. (NYSE: ARI) originates and invests in mortgages, mezzanine loans and other debt investments related to commercial real estate. Its portfolio has an amortized cost of $8.5 billion as of May 2023.
Apollo Commercial Real Estate Finance has an impressive $1.40 forward dividend, yielding 13.74%. Shares have traded between $7.91 and $13.10 over the past 52 weeks, closing at $10.24 on May 23.
4. Chimera Investment Corp.
Chimera Investment Corp. (NYSE: CIM) invests in residential mortgage loans, residential mortgage-backed securities and commercial mortgage-backed securities. The REIT has $14.2 billion in assets.
Closing at just $4.89 per share on May 23, Chimera Investment Corp. stock has a 52-week range of $4.75 to $10.66. Its forward dividend is $0.92, yielding 18.85%.
Commercial REITs
Some REITs specialize in commercial properties, such as shopping malls, industrial parks or hospitals.
5. Medical Properties Trust Inc.
As its name would imply, Medical Properties Trust Inc. (NYSE: MPW) owns hospitals and medical buildings. In fact, it is the second-largest nongovernment owner of hospitals in the world. Over half (61%) of its properties are in the United States, and most of the rest are in Europe. The company has $19.7 billion in assets.
Investing for Everyone
On May 23, Medical Properties Trust closed at $7.90 per share. Its 52-week range is $7.10 to $18.92 per share. The company has a forward dividend of $1.16, which translates to a yield of 14.68%.
6. Office Properties Income Trust
Office Properties Income Trust (Nasdaq: OPI) owns, operates and leases buildings to commercial tenants. It has 157 properties in its portfolio, most of which are occupied by a single tenant. These properties total 20.9 million square feet of space and are located in 33 states and Washington, D.C.
Office Properties Income Trust closed at $7.09 on May 23 and has a 52-week range of $5.86 to $21.50. Its 14.10% yield is generated by its $1 forward dividend.
Casino REITs
Casinos are a popular investment for REITs, and they’re often quite lucrative, since the house always wins. In addition to the casinos themselves, these REITs often invest in hotels, restaurants and entertainment venues.
7. VICI Properties Inc.
VICI Properties Inc. (NYSE: VICI) invests in hospitality, entertainment and gaming properties, and it owns such recognizable properties as Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas. In all, the company owns 49 gaming facilities, which include approximately 60,100 hotel rooms and over 450 restaurants and entertainment venues.
VICI closed at $31.09 on May 23, and its share price in the past 52 weeks has ranged from $27.75 to $35.69 — a relatively narrow range given the market volatility. Its forward dividend is $1.56, yielding 4.94%.
8. Gaming and Leisure Properties Inc.
Gaming and Leisure Properties Inc. (Nasdaq: GLPI) owns and operates 59 gaming facilities in 18 states, including Ameristar Black Hawk and Bally’s Casino – Black Hawk in Colorado, Bally’s Dover Casino in Delaware, Plainridge Park Casino in Massachusetts, Hollywood Casino Aurora in Illinois, Belterra Casino Resort in Indiana and Isle of Capri Casino in Iowa, among many others.
Investing for Everyone
With a forward dividend of $2.83, resulting in a yield of 5.85%, Gaming and Leisure Properties closed on May 23 at $47.86. This price was right in the middle of its relatively narrow 52-week range of $42.71 to $55.13.
Takeaway
Real estate investment trusts can be volatile in terms of their stock price and their dividends. However, real estate has a tendency to act as a hedge against inflation, making it attractive in times when equities may not be. And since REITs provide income as well as price appreciation, there may be a place for them in your portfolio.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of May 24, 2023, and is subject to change.
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