Which REITS Have The Best Dividends?

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If you're wondering about REITs that have great dividends, here's an article for you. I'll go over the basics of REITS and the top picks.

investing in REITS
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So, you have decided to invest in the real estate market. Specifically, a Real Estate Investment Trust (commonly known as a REIT). If managed correctly, investment with a REIT can be a great and prosperous long term investment strategy. It is not without its risk of course, but there are many REITs that are known for offering best dividends. So, if you are looking to invest, then we will discuss some of the REITs that offer the best return on your investment.

What is a REIT?

Defined by Investopedia, a REIT is a company (a trust) that owns, operates, or finances real estate. More specifically, income generating properties. If you were to enter into a REIT, you would become an investor of the property in question and would be able to share in any of the profits generated. The trust would be responsible for the management and the legalities, and you would simply sit back and accept your share of the dividends.

How Can You Profit from REITs?

We have previously mentioned dividends from REIT’s, but how exactly does this work? If you are considering a trust as an investment, then you will want to understand where your money is coming from. Nareit describes the income generated from RETIs as being high and reliable. This profit is delivered in the form of dividends.

Any income generated form a property that you have invested in will be shared between everyone within the trust. So, if you have invested in a retail property that is leased out to a business, this rental income will be divided between investors and the trust owner. As a general rule, REITs will pay out 90% of their net earnings to the shareholders (investors) as dividends. These are typically paid monthly and are classed as income (source: Intelligent Income)

How Much Can You Earn from REITs?

Investing in an REIT property is not unlike investing in the share market – the more you put in, the more you will gain from it. There are of course different types of REIT’s and no two will be identical. Before investing your money, you will want to research individual REITs and check reviews. Typically, the best and least performing REITs will be highlighted, and you will definitely want to choose a high performing trust if possible.

How Can I Choose a High Paying REIT?

According to Kiplinger, the general rule of thumb is to steer clear of any REIT that typically yields less than 4% return on principle. You may notice that it is very hard to come across stocks paying over 4% in dividends, and this is true. This is one reason why REITs are so popular and advantageous in the real estate investment world. There are several REITs on the public trading market that yield more than 5%. These are detailed in the next section.

Which REITS Have the Best Dividends?

As previously mentioned, a REIT will be considered to have a good dividend payout if it yields more than 5%, and all the below mentioned have managed to do just that.

W.P. Carey

Market value: $12.3 billion

Dividend yield: 6%

Portfolio: high quality, single-tenant properties. Tenants pay maintenance and taxes so there is more money to pass onto investors. 98.9% occupancy rate

Number of properties: 1,216 across USA and Europe

National Retail Properties

Market value: $6.9 billion

Dividend yield: 5.2%

Portfolio: Single-tenant properties across 37 industries. 98.4% occupancy rate.

Number of properties: 3,114 across 48 states in USA

Noteworthy achievements: 5.8% annual share growth since 2014.

Medical Properties Trust

Market value: $10.3 billion

Dividend yield: 5.6%

Portfolio: Healthcare REIR that invests in hospitals.

Number of properties: 385 hospitals representing 42,000 licensed beds. Spread across 9 countries. Second largest owner of hospital beds in the USA.

Noteworthy achievements: 30% annual asset growth and 8% annual share growth since 2010.

American Campus Communities

Market value: $5.6 billion

Dividend yield: 4.7%

Portfolio: USA’s largest developer, manager, and owner of student housing. 160 housing properties and 139,900 beds in total. 90.3% occupancy rate

Number of properties: 385 hospitals representing 42,000 licensed beds. Spread across 9 countries. Second largest owner of hospital beds in the USA.

Noteworthy achievements: Current development projects underway at University of Southern California, San Francisco State University, and the Disney College Program.

As can be seen, the top four REITs are all quite different. They are in different sectors, spread around the entire world and have varying market values. One thing they all have in common is that they offer a very high dividend yield, and at the end of the day, this is what is most important for investors. These REITs also are showing signs of growth and look to be good long-term investments that will be around for years to come.

Future Trends for REITs and Dividend Payouts

There is no doubt that the past year or so have been difficult on the economy. Many organizations have suffered economically, and many stock investments have decreased in value. According to US News, when compared with other parts of the economy, the US real estate market has held up well in recent times. This strength in the market is why many well performing REITs have managed to hold at least 4% dividends.

This upward trend in the real estate market means that it is beneficial to choose a REIT that has stayed strong over the past couple of years. As the economy recovers, so too will dividend payouts from real estate investments and trusts.

Conclusion

There is a sole reason that people choose to invest in the real estate market. And the same reason that people will invest specifically in REITs. Profit and return on investment. When you invest in a trust, your payouts will be classed as dividends, and the success of your investment can be measured by how high your dividend share is. As can be seen, all REITs operate in the same way (but in different industries and sectors). Yet some are clearly paying higher dividends than others. So, if you are thinking about investing in one yourself, you will be best to ensure that your investments are secure, and your dividends high.

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About the AuthorCharles at infoSpike

Charles is the founder of infoSpike.com. He enjoys real estate investing, marketing, and personal finance. Read more about Charles here.