3 REITs With 10%+ Dividends Priced Under $20 Per Share

3 REITs With 10%+ Dividends Priced Under $20 Per Share

Income investors sometimes look for higher-dividend yields on low-priced stocks. But buying stocks below $10 can be a high-risk venture as these stocks are usually cheap for good reasons. Therefore, it is usually better to purchase stocks above $10.

Funds from operation (FFO) is the best measure of operating performance because it is the cash flow used for dividend payouts. Dividends well covered by the FFO will usually be safer from cuts.

Here are three real estate investment trust (REIT) stocks with double-digit dividend yields in the less risky price range between $11 and $20. Despite heavy declines in 2022, all three have recent funds from operations well beyond the dividends being paid.

Arbor Realty Trust Inc. ABR is a Long Island-based mortgage REIT (mREIT) that invests in bridge and mezzanine loans for multifamily residential and commercial real estate markets in the U.S.

Over the past 52 weeks, Arbor Realty Trust stock is down about 43%, as spiking interest rates have decimated the mREITs. However, its current dividend of $1.56 is well covered by its 12-month FFO of $2.46. The current yield is 13.4%.

Arbor Realty Trust’s dividend growth has been incredible, rising 105% over the past five years. That speaks well for the confidence the company has in its future.

If you have a longer-term horizon, you can get paid well while waiting for the Federal Reserve to finish its rate hikes so that Arbor Realty Trust can find its footing again.

Office Properties Income Trust OPI is a Massachusetts-based real estate company that owns, leases and manages office space. Many of its tenants are long-term and stable, and its portfolio includes government offices.

However, Office Properties Income Trust has fallen from its 52-week high of $28.49 to a recent price near $12.50. The Fed interest hikes are certainly a key reason, but declining revenue and negative earnings per share (EPS) the past two quarters haven’t helped. 

Office Properties Trust pays a dividend of 55 cents per quarter ($2.20 annual), yielding 17.7%. Second-quarter FFO of $1.22 was more than ample to cover the dividend.

However, in volatile markets such as those occurring in 2022, investors want to see increasing revenue and EPS. Office Properties Income Trust may take some time to rebound. And if the declines continue, the dividend could be cut again. But like Arbor Realty Trust, one gets paid handsomely to wait in the meantime.

Starwood Property Trust Inc. STWD is a Greenwich, Connecticut-based mREIT that acquires, finances and manages first mortgages, mezzanine loans and other types of loans for commercial and residential real estate. Starwood Property Trust operates throughout the U.S., Europe and Australia.

Starwood Property Trust stock has fallen about 30% from its 52-week high of $26.36, yet this is far less than the decline of several other mREITs.

FFO from its most recent quarter was 61 cents, certainly enough to cover the 48 cents it paid out in dividends. At its recent price of $18.50, the annual dividend of $1.92 yields 10.3%.

Starwood Property Trust has been profitable over the past few years, but revenue and EPS have been volatile from quarter to quarter. Despite this, the dividend has been stable and paid out consistently over the past five years.

When mREITs eventually bounce back, Starwood Property Trust could be one of the leaders of that group. In the meantime, the stable dividend is ideal for income-oriented investors.

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Posted In: Alternative investmentsREITSmall CapReal Estate
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