Income-oriented investors are always on the lookout for real estate investment trusts (REITs) with high-yielding dividends. But share price performance is also important. Can you have strong dividends as well as price appreciation from the same stocks? Take a look at three REITs with dividend yields over 8% that have performed like champions recently:
NewLake Capital Partners Inc. NLCP is a New Canaan, Connecticut-based industrial REIT that specializes in acquiring, triple-net leasing and providing capital to cannabis companies. NewLake Capital Partners was founded in 2019 and had its initial public offering (IPO) in August 2021 at $26 per share. Its tenants include the largest companies in the cannabis industry, including as Curaleaf, Cresco Labs Inc. and Truelieve.
While NewLake Capital Partners is very new and still small compared to other REITs, it is growing quickly and with virtually no debt. Third-quarter funds from operation (FFO) was up 56% from the third quarter 2021, and revenue grew 15% during the same time frame.
NewLake Capital Partners has raised its dividend aggressively from $0.12 in September 2021 to $0.37 in September 2022. Its forward annual FFO of $1.57 covers the dividend of $1.36 at 86%, but given the dividend increases, it seems likely that management expects the FFO to continue higher in future quarters to reduce that ratio. NewLake Capital Partners also recently announced a $10 million buyback plan.
The shares have not performed well since the IPO. But with a dividend yield of 8.2% and a 17% return over the past four weeks, this startup REIT could be poised for much better future returns.
Modiv Inc. MDV is a diversified commercial REIT with 38 triple net-leased industrial and retail single-tenant properties across 14 states. Its tenants include Dollar General Corp. and 3M.
Third-quarter operating results were mixed. Revenue of $10.2 million was up 17% from the third quarter of 2021, but adjusted funds from operation (AFFO) of $3.1 million, or $0.31 per diluted share, was below the $3.8 million or $0.44 per diluted share number from the third quarter of 2021.
Nonetheless, earnings beat analysts’ expectations, and so Modiv shares have been on fire. Over the past five trading days, Modiv is up 17.26%, and overall in the last four weeks, it’s up 13.63%. Modiv pays a monthly dividend of $0.096 or $1.15 annually. Even after its big weekly move, the annual dividend is still generating 9.37%, but that yield may not last much longer.
Medical Properties Trust Inc. MPW is a Birmingham, Alabama-based healthcare REIT that owns and operates 434 general acute care and other properties across 10 countries, with locations in the U.S., Europe and Australia. Sixty-two percent of its properties are in the United States.
Investors have worried all year how the financial problems of its largest client, Steward Medical Group Inc., would affect Medical Properties Trust. Steward Medical Group, which operates about 30% of Medical Properties Trust’s facilities, was having difficulty paying its rents and was rumored to be facing bankruptcy. Largely because of this, Medical Properties Trust has endured a brutal 2022, losing 43.69% year-to-date.
However, with some recent positive developments affecting both Steward and Medical Properties Trust, investors seem to have shrugged off their concerns, sending Medical Properties Trust shares higher by 12.94% over the past four weeks, with 5.82% coming within the last five trading days.
Looking at Medical Properties’ third-quarter operating results in relation to the third quarter of 2021, revenue declined from $390.8 million to $352.3 million, but AFFO increased from $0.34 to $0.36 per share, and net income per diluted share was up from $0.29 to $0.37 in the third quarter of 2022. Its latest quarterly dividend of $0.29 gives it an annual dividend of $1.16, yielding 8.8%.
It’s too soon to say whether this will be a lasting bounce back, but for now it’s clear that Medical Properties Trust is one of the best-performing REITs recently with a dividend yield of over 8%.
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