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By Bob Ciura, SureDividend.com
Investors looking to generate higher income levels from their investment portfolios should look at Real Estate Investment Trusts or REITs. These are companies that own real estate properties and lease them to tenants or invest in real estate backed loans, both of which generate a steady stream of income.
The bulk of their income is then passed on to shareholders through dividends. You can see all 200+ REITs here.
You can download our full list of REITs, along with important metrics such as dividend yields and market capitalizations, by clicking on the link below:
The beauty of REITs for income investors is that they are required to distribute 90% of their taxable income to shareholders annually in the form of dividends. In return, REITs typically do not pay corporate taxes.
As a result, many of the 200+ REITs we track offer high dividend yields of 5%+.
But not all high-yielding stocks are automatic buys. Investors should carefully assess the fundamentals to ensure that high yields are sustainable.
Note that while the securities in this article have very high yields, a high yield alone does not make for a solid investment. Dividend safety, valuation, management, balance sheet health, and growth are also very important factors.
We urge investors to use the analysis below as informative but to do significant due diligence before buying into any security – especially high-yield securities. Many (but not all) high-yield securities have a significant risk of a dividend reduction and/or deteriorating business results.
Table of Contents
- High-Yield REIT No. 10: Two Harbors Investment Corp. (TWO)
- High-Yield REIT No. 9: Apollo Commercial Real Estate Finance (ARI)
- High-Yield REIT No. 8: Medical Properties Trust (MPW)
- High-Yield REIT No. 7: Global Net Lease (GNL)
- High-Yield REIT No. 6: ARMOUR Residential REIT (ARR)
- High-Yield REIT No. 5: Ares Commercial Real Estate (ACRE)
- High-Yield REIT No. 4: AGNC Investment Corp. (AGNC)
- High-Yield REIT No. 3: Sachem Capital (SACH)
- High-Yield REIT No. 2: Orchid Island Capital (ORC)
- High-Yield REIT No. 1: Uniti Group (UNIT)
High-Yield REIT No. 10: Two Harbors Investment Corp. (TWO)
Dividend Yield: 14.1%
Two Harbors Investment Corp. is a residential mortgage real estate investment trust (mREIT). As such, it focuses on residential mortgage-backed securities (RMBS), residential mortgage loans, mortgage servicing rights, and commercial real estate.
The trust derives nearly all of its revenue in the form of interest through available-for-sale securities.
Two Harbors reported its financial results for the first quarter, indicating a book value of $15.64 per common share and declaring a first-quarter common stock dividend of $0.45 per share, representing a 5.8% quarterly economic return on book value.
The company generated Comprehensive Income of $89.4 million, equivalent to $0.85 per weighted average basic common share, and repurchased 485,609 shares of preferred stock, thereby reducing the ratio of preferred stock to total equity.
TWO settled $3.1 billion unpaid principal balance (UPB) of MSR through bulk purchases and flow-sale acquisitions.
High-Yield REIT No. 9: Apollo Commercial Real Estate Finance (ARI)
Dividend Yield: 14.1%
Apollo Commercial Real Estate Finance invests in debt securities including senior mortgages, mezzanine loans, and other commercial real estate-related debt. Apollo’s investments, placed in the U.S. and Europe, are collateralized by the underlying estate properties.
Apollo Commercial Real Estate Finance holds a multi-billion-dollar commercial real estate portfolio, which is diversified as you can see in the below image:
Apollo Commercial Real Estate Finance reported its first-quarter distributable earnings, which surpassed the Wall Street consensus but declined both sequentially and from a year ago. The mortgage REIT experienced a decrease in interest income and a rise in expenses during the quarter.
Book value per share suffered a decline of $1.00 in the first quarter, attributed to an incremental CECL allowance of about $142 million on a mezzanine loan secured by an ultra-luxury condominium development in New York City.
High-Yield REIT No. 8: Medical Properties Trust (MPW)
Dividend Yield: 14.5%
Medical Properties Trust is the only pure-play hospital REIT today. It owns a portfolio of over 400 properties which are leased to over 30 different operators.
The majority of the assets are general acute care hospitals, but also include inpatient rehabilitation and long-term acute care.
The portfolio of assets is also diversified across different geographies with properties in 29 states, as well as Germany, the UK, Italy, and Australia.
Medical Properties Trust, Inc. (MPW) announced its financial and operational results for the first quarter. The company executed total liquidity transactions of $1.6 billion year-to-date, reaching 80% of its initial FY 2024 target.
Despite recording a net loss of ($1.23) per share and Normalized Funds from Operations (NFFO) of $0.24 per share in the first quarter of 2024.
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High-Yield REIT No. 7: Global Net Lease (GNL)
Dividend Yield: 14.6%
Global Net Lease invests in commercial properties in the U.S. and Europe with an emphasis on sale-leaseback transactions. GNL’s portfolio includes over 1300 properties, spanning nearly 67 million square feet with a gross asset value of $9.2 billion.
Global Net Lease released its financial and operational results for the first quarter of 2024, showcasing several notable highlights. Despite a slight decrease in revenue to $206.0 million compared to the previous quarter’s $206.7 million, the company reported significant improvements elsewhere.
Net loss attributable to common stockholders notably decreased to $34.7 million from $59.5 million in the fourth quarter of 2023.
Core Funds from Operations (Core FFO) surged by 17% to $56.6 million, while Adjusted Funds from Operations (AFFO) increased by 5% to $75.0 million. AFFO per diluted share also grew by 6% to $0.33 in the first quarter of 2024.
The company closed and disposed of assets totaling $554 million, with a cash cap rate of 7.2% on occupied assets and a weighted average remaining lease term of 3.9 years.
High-Yield REIT No. 6: ARMOUR Residential REIT (ARR)
Dividend Yield: 14.6%
ARMOUR Residential invests in residential mortgage-backed securities that include U.S. Government-sponsored entities (GSE) such as Fannie Mae and Freddie Mac. It also includes Ginnie Mae, the Government National Mortgage Administration’s issued or guaranteed securities backed by fixed-rate, hybrid adjustable-rate, and adjustable-rate home loans.
Unsecured notes and bonds issued by the GSE and the US Treasury, money market instruments, and non-GSE or government agency-backed securities are examples of other types of investments.
ARMOUR’s first-quarter 2024 results showed GAAP net income available to common stockholders of $11.5 million or $0.24 per common share, with net interest income amounting to $5.3 million.
Distributable Earnings available to common stockholders stood at $40.4 million, representing $0.82 per common share. The company paid common stock dividends of $0.24 per share per month or $0.72 per share for the first quarter.
High-Yield REIT No. 5: Ares Commercial Real Estate (ACRE)
Dividend Yield: 14.8%
Ares Commercial Real Estate Corporation is a specialty finance company primarily engaged in originating and investing in commercial real estate (“CRE”) loans and related investments. ACRE generated around $198.6 million in interest income last year.
The company’s loan portfolio (98% of which are senior loans) comprises 44 market loans across 8 asset types, with an outstanding principal balance of $2 billion. The majority of the loans are tied to multifamily, office, and mixed-use properties.
In terms of geographical diversification, ACRE’s exposure features a healthy mix between the Southeast, West, and Midwest.
On May 9th, 2024, ACRE reported its Q1 results for the period ending March 31st, 2024. Interest income came in at $44.0 million, 11% lower year-over-year.
The decline was due to the company’s loans struggling to perform as higher rates of inflation and certain cultural shifts such as work-from-home trends continue to impact the operating performance and the economic values of commercial real estate.
High-Yield REIT No. 4: AGNC Investment Corp. (AGNC)
Dividend Yield: 14.9%
American Capital Agency Corp is a mortgage real estate investment trust that invests primarily in agency mortgage–backed securities (or MBS) on a leveraged basis.
The firm’s asset portfolio is comprised of residential mortgage pass–through securities, collateralized mortgage obligations (or CMO), and non–agency MBS. Many of these are guaranteed by government–sponsored enterprises.
AGNC Investment’s first-quarter non-GAAP earnings continued their downward trend amid the company’s operation in a higher interest rate environment.
Q1 net spread and dollar roll income per share of $0.58, slightly surpassing expectations, declined from previous quarters.
The quarter’s earnings excluded an estimated “catch-up” premium amortization benefit. Tangible net book value per common share increased to $8.84, although the economic return on tangible common equity declined.
High-Yield REIT No. 3: Sachem Capital (SACH)
Dividend Yield: 17.4%
Sachem Capital Corp is a Connecticut-based real estate finance company that specializes in originating, underwriting, funding, servicing, and managing a portfolio of short-term (i.e., three years or less) loans secured by first mortgage liens on real property located primarily in Connecticut.
Each of Sachem’s loans is personally guaranteed by the principal(s) of the borrower, which is typically collaterally secured by a pledge of the guarantor’s interest in the borrower. Sachem generates around $65 million in total revenues.
On April 1st, 2024, Sachem Capital Corp. announced its full-year results for the period ending December 31st, 2023. Total revenues for the year came in at $65.6 million, up 25.5% compared to FY-2022.
Revenue growth was driven by growth in size of the company’s mortgage portfolio and increases in rates charged to borrowers.
High-Yield REIT No. 2: Orchid Island Capital Inc (ORC)
Dividend Yield: 17.4%
Orchid Island Capital is a mortgage REIT that is externally managed by Bimini Advisors LLC and focuses on investing in residential mortgage-backed securities (RMBS), including pass-through and structured agency RMBSs.
These financial instruments generate cash flow based on residential loans such as mortgages, subprime, and home-equity loans.
Orchid Island reported its first-quarter 2024 results, revealing a net income of $19.8 million, equivalent to $0.38 per common share. This figure includes net interest expense of $2.5 million, or $0.05 per common share, and total expenses of $3.7 million, or $0.07 per common share.
Notably, the company recorded net realized and unrealized gains of $26.0 million, or $0.50 per common share, on RMBS and derivative instruments, inclusive of net interest income on interest rate swaps.
Additionally, Orchid declared and paid first-quarter dividends of $0.36 per common share and reported a book value per common share of $9.12 as of March 31, 2024. The total return for the period stood at 4.18%.
High-Yield REIT No. 1: Uniti Group (UNIT)
Dividend Yield: 19.8%
Uniti Group focuses on acquiring, constructing, and leasing out communications infrastructure in the United States.
In particular, it owns millions of miles of fiber strand along with other communications real estate.
Uniti Group reported solid results for the first quarter of 2024, with consolidated revenues reaching $286.4 million. Net income stood at $41.3 million, and adjusted EBITDA amounted to $228.6 million, achieving adjusted EBITDA margins of approximately 80%. The core recurring strategic fiber business grew by 4% compared to the same period in 2023.
Uniti Fiber contributed $68.8 million in revenues and $23.8 million in Adjusted EBITDA for the quarter, while Uniti Leasing contributed $217.6 million in revenues and $210.7 million in Adjusted EBITDA.
Final Thoughts
REITs have significant appeal for income investors due to their high yields. These 10 extremely high-yielding REITs are especially attractive on the surface, although investors should be aware that abnormally high yields are often accompanied by elevated risks.
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