3 High Dividend REITs for Fixed Passive Income

Stocks are more volatile than ever as macroeconomic headwinds pile up. Recent data revealing a slowdown in economic activity in China has raised major concerns about a global economic slowdown, as China is the manufacturing hub of the world. Major US benchmarks are currently down more than 13% year-to-date.

As the Fed prepares for another rate hike of 75 basis points this month, the housing market is expected to remain strong. Rising federal funds rates are likely to be passed on to mortgage rates, meaning interest income for most real estate investment trusts (REITs) is set to increase in the coming months. This trend is expected to boost their dividend yields as well, as REITs are required to distribute at least 90% of their taxable profits to shareholders through dividend payments.

Simon Property Group Inc. (NYSE: SPG)

SPG is one of the largest commercial REITs in the United States, operating approximately 199 properties throughout North America, Europe and Asia. An S&P 100 company, SPG is the largest owner and operator of shopping centers in the US

With a dividend yield of 6.93%, it is one of the best REITs for passive income generation. Simon Property has a payout ratio of 117.41%, which is impressive. In fact, the REIT raised its quarterly dividend payment by 25 cents, or 16.7% year over year, to $1.75 for the fiscal third quarter of 2022, payable on September 30. This follows the impressive revenue and profit reported in the most recent quarter. For the quarter ended June 30, SPG’s revenue was $1.28 billion. Operating income (before other items) improved nearly 4% year over year to $626.76 million.

SPG also raised its guidance for 2022, as stated in its latest earnings release, which is indicative of further possible dividend increases in the coming quarters.

Realty Income Corp. (NYSE: O)

Real Estate Income is also known as a Monthly Dividend Company® because of its long history of monthly payments. The REIT has increased its dividends 116 times since going public in 1994, earning its participation in the S&P 500 Dividend Aristocrats Index. In addition, real estate income is a component of the S&P 500. The San Diego-based Trust currently owns and manages more than 11,400 properties in the US, Puerto Rico, the UK and Spain.

Realty Income’s total returns have grown at a compound annual growth rate (CAGR) of 15.1% over the past 28 years since its listing on the New York Stock Exchange. Its dividend payouts grew at a 4.4% CAGR during this period, as the company paid 626 consecutive monthly dividends to shareholders.

The stock currently pays $2.97 in dividends annually, which translates to a yield of 4.38%. The company’s strong financials and growth prospects will allow it to maintain its monthly dividend payout policy over the long term. Realty Income’s occupancy is 98.9% as of June 30, 2022, the highest in 10 years. Additionally, the REIT reported a 105.6% recovery rate on divestiture activity last quarter. It currently plans to invest more than $6 billion in fiscal 2022 to expand its global real estate portfolio.

Annaly Capital Management Inc. (NYSE: NLY)

With approximately $82 billion in total assets, NLY is a market leader in residential mortgage financing. The REIT invests primarily in mortgage-backed securities. Although Annaly’s book value declined marginally sequentially due to macroeconomic headwinds, the REIT’s earnings remained strong. Its net income for the six months ended June 30, 2022, nearly doubled year over year to $2.89 billion.

Regarding this, David Finkelstein, CEO and President of Annaly said: “These [macroeconomic] The pressures affected our book value, although our portfolio again generated earnings that exceeded our dividend. Despite these challenges, we remain bullish on the outlook for Agency MBS given historically attractive new investment yields and increased clarity from the Federal Reserve on the path forward for rate hikes and quantitative tightening.”

The stock pays $0.88 in annual dividends, yielding an impressive 13.48%. In fact, NLY has one of the highest annual dividend yields among its bonds.

Analysts expect Annaly’s revenue to grow 34.80% year-over-year to $638.80 million in its fiscal third quarter (end September). This increase is expected to boost NLY’s dividend payments in the coming quarters as well.

Highlights of this week’s private property markets:

Homes arrived It is launching its first batch of fractional rental properties with a minimum investment of $100. Read more…

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