One of the main reasons for investing in real estate investment trusts (REITs) is the kind of dividends many pay. While Treasury bonds are just beginning to catch up with inflation, some REITs offer better yields as long as investors are willing to accept the risks attached to owning them.
Here are eight high-dividend REITs priced for less than $10 per share:
ARMOUR Residential REIT Inc. ARR pays a 15.15% dividend, and it’s priced at $7.73. It’s a mortgage real estate investment trust (REIT) with headquarters in Vero Beach, Florida. According to its website, it “ invests primarily in residential mortgage-backed securities issued or guaranteed by a United States Government-sponsored entity, such as the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or guaranteed by the Government National Mortgage Administration (Ginnie Mae).” B. Riley Securities analysts, in February, 2022, reiterated a neutral rating on ARMOUR with a price target of $11 to $9.50.
Brandywine Realty Trust BDN is paying an 8.19% dividend, and shares go for $9.07. The company owns over 24 million square feet with a total market capitalization of about $5 billion. Credit Suisse analysts initiated coverage of the REIT in June 2022 with a neutral rating. Brandywine recently beat Q2 FFO estimates by reporting $0.34 per share compared to $0.32 per share one year ago.
Broadmark Realty Capital Inc. BRMK pays a dividend of 11.01%. The price of a share at the time of this writing is $7.44. This REIT is based in Seattle and works with commercial and residential real estate projects across the country. Analysts at Piper Sandler initiated coverage of Broadmark in June 2022 with a neutral rating.
Annaly Capital Management Inc. NLY is paying a 12.75% dividend with shares priced at $6.64. With headquarters in New York City, it’s one of the big mortgage REITs. Annaly describes its work this way: “Our diversified investment strategies include agency mortgage-backed securities, mortgage servicing rights and residential real estate.” Piper Sandler maintains a neutral on Annaly while Keefe, Bruyette and Woods upgraded it in June from market perform to outperform. The REIT’s price-to-earnings ratio of just 2.73 is unusually low.
New York Mortgage Trust Inc. NYMT pays a 12.54% dividend. Shares traded today at $3.13. Founded in New York, New York in 2003, this REIT has an investment portfolio value of $3.6 billion, according to its website. Analysts are unenthusiastic about the REIT: Keefe, Bruyette and Woods in July 2022 downgraded their opinion of it from outperform to market perform.
Orchid Island Capital Inc. ORC currently offers investors a dividend of 16.56%. The price per share as of this writing is $3.21. The REIT says it’s “a specialty finance company that invests in residential mortgage-backed securities on a leveraged basis. Income generated for distribution to our shareholders is based primarily on the difference between the yield on our mortgage assets and the cost of our borrowings.” In January 2022, JMP Securities initiated coverage of Orchid Island Capital with a market perform rating.
Redwood Trust Inc. RWT is paying a 10.81% dividend and is priced at $8.35 per share. According to the company website, Redwood invests “in mortgages for single-family and rental properties...and also acquires, sells and securitizes residential loans.” JP Morgan initiated coverage of the REIT in May 2002 with an overweight rating and a price target of $11.50.
Two Harbors Investment Corp. TWO pays a dividend of 12.57% and goes for $5.28 per share. This mortgage REIT, based in St. Louis, is “focused on investing in, financing and managing Agency residential mortgage-backed securities (Agency RMBS).” Citigroup initiated coverage of Two Harbors Investment in January 2022 with a neutral rating and a price target of $5.50.
Making an investment in a company based on dividend yield requires thoughtful consideration of all factors involved, especially the macroeconomic ones related to Fed policy. Going for high yield can be a risky venture, and serious thought should be applied before money is invested.
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Not investment advice. For educational purposes only.
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