One of the big 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 seven REITs with better-than-average, hard-to-ignore dividend yields:
AGNC Investment Corp. AGNC is paying 11.36% at a price of $12.57. The Bethesda, Maryland-based company specializes in residential mortgage REITs backed via the Federal National Mortgage Association and similar government agencies. AGNC also invests in other kinds of mortgages or mortgage-related securities. In June, Bose George, the REIT analyst at Keefe, Brunette & Woods Inc., upgraded AGNC from “market perform” to “outperform.”
Claros Mortgage Trust CMTG is paying a 7.97% dividend at the current price of $18.60. It focuses mostly on commercial real estate loans in major U.S. markets. This REIT has “outperform” ratings from some of the top investment firms, including Wells Fargo & Co. WFC and JMP Securities. JP Morgan’s analysts, on the other hand, recently reduced its rating from “overweight” to “neutral.”
KKR Real Estate Finance Trust Inc. KREF offers investors a 8.76% yield at today’s price of $19.56. It originates and buys senior mortgage loans secured by different types of commercial real estate assets. The concept is to preserve capital while offering a sizable dividend to shareholders. Raymond James Financial Inc.’s RJF REIT analyst gave KKR a “market outperform” rating, and JP Morgan’s analyst has KKR in the “overweight” category. The company’s available common stock pays a 1.34% dividend yield.
Annaly Capital Management Inc. NLY is one of the highest-paying real estate investment trusts with a 13.08% dividend yield This mortgage REIT is mostly involved in agency securities, commercial mortgage loans and mortgage-backed securities. Annaly makes money based on the spread between interest earned on what it owns and interest payments on what it’s borrowed. Piper Sandler Cos.’s PIPR analyst gives it a “neutral” rating while Keefe, Bruyette & Woods recently upgraded the REIT from “market perform” to “outperform.”
Arbor Realty Trust Inc. ABR is paying a 9.94% dividend yield. The company is involved in multifamily and commercial assets using a diversified portfolio of structured finance assets. The REIT sometimes buys real estate assets and invests in real estate-related notes. Piper Sandler has an “overweight” rating on Arbor and Raymond James ranks it as “outperform.”
Vornado Realty Trust VNO pays a 7.18% yield at its current price of $28.81. This REIT invests in properties in major markets including New York, Chicago and San Francisco. While Mizuho maintains an “underperform” on Vornado, the analysts at Truist Securities has the company as a “buy.”
Dynex Capital Inc. DX is a real estate investment trust paying a dividend yield of 9.52%. The REIT mainly invests in residential and commercial mortgage-backed securities. Analysts at Keefe, Bruyette & Woods like Dynex: They recently upgraded it from “market perform” to “outperform.” JonesTrading Institutional Services LLC analysts have a “buy” rating on the REIT.
Investors buying real estate investment trusts should keep a close eye on interest rates. Investors in this market must have faith in the ability of real estate and related assets to continue to perform well.
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