Betting on high-yield REIT investments can prove remarkably lucrative over time.
These businesses stand out in the investment world because they are obligated to return 90% of their taxable income to shareholders in the form of dividends. Additionally, REITs benefit from the exemption of corporate taxes.
Of late, REITS have performed remarkably well, despite fluctuating interest rates. These REITs have proven remarkably resilient, consistently distributing sizeable dividends despite the headwinds. Hence, they continue to be a hit with income-focused investors looking for high-yield opportunities.
And so, these REIT investments excel in delivering stable dividend returns through property investments and effective management. Each of these stocks are employing unique strategies to cater to specific real estate niches. Moreover, their excellent financial health makes them attractive for investors looking to diversify their portfolios with high-yield investments. Also, they are trading at attractive valuations, which further adds to their bull-case.
Newlake Capital Partners (NLCP)
Newlake Capital Partners (OTCMKTS:NLCP) is a leading industrial REIT in the cannabis space. It specializes in triple-net leasing and providing essential capital to cannabis businesses.
A triple-net leading approach is incredibly effective, as it offloads property expenses. Those include taxes, insurance and maintenance to tenants, bolstering profitability and ensuring a steady income for shareholders. Moreover, the provision of funds to cannabis companies is another differentiator that is crucial in a tightly regulated market. Consequently, as per its latest report, NLCP boasts a 100% occupancy rate with an average of 14.1 years remaining on leases.
Financially, NLCP is doing remarkably well. Its average funds from operations (AFFO), a key metric in assessing the quality of REITs, has climbed 6.8%, a whopping 196% above the sector median. This powerful performance supports a healthy 5.8% dividend growth and a hefty 9.30% yield. Moreover, its stock trades at just 14 times forward non-GAAP earnings, trading 58% below the sector median
Realty Income (O)
Realty Income (NYSE:O) is a giant in the realm of income stocks, celebrated for its powerful and sustained dividend performance. To put things in perspective, it boasts a track record spanning over 26 years of consistent dividend growth. Realty Income’s unique approach to dividend distribution, with monthly payouts, has fittingly earned it the title of “The Monthly Dividend Company.”
It stands out for its diversified retail real estate portfolio, underscoring its reputation as one of the top income stock picks. Its stable shareholder rewards program and high-quality retail locations, which maintain over 98% occupancy rate, underpin its investor appeal.
Also, Realty Income’s superb dividend profile is naturally backed by its robust business. Its 3-year average AFFO has held steady at 5.7%, 38% higher than the sector median. Moreover, it recently bumped its financial outlook for the year, boosting the lower end of its earnings guidance and expanding its expected investment volume. Hence, the encouraging update indicates its management’s confidence in continued top-and-bottom-line growth for the REIT.
Agree Realty (ADC)
Another top U.S. retail REIT, Agree Realty (NYSE:ADC) manages a sprawling portfolio of nearly 2,100 properties. Over the past decade, ADC has grown at an impressive pace through its long-term lease strategy, marked by a remarkable 99.6% lease rate with an average lease term of 8.2 years. Furthermore, the stock offers an attractive investment option for investors looking to blend income and growth. It has delivered a total return of 216% over the past decade, just shy of the S&P 500’s 237%.
Additionally, it remains financially healthy as ever, as evidenced by another solid quarterly report. Its funds from operations (FFO) of $1.01 per share slightly surpassed expectations, with revenue jumping by 18% year-over-year (YOY) to $149.45 million, beating estimates by $1.09 million. Also, it recently declared a 25 cent per share dividend, annually amounting to $3, while yielding a solid 4.8%. With these factors in play, Agree Realty’s capacity to maintain a strong fiscal footing while rewarding investors positions it enviably in the competitive REIT space.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
