Income investors looking for high-yield stocks with safe dividends should take a closer look at Real Estate Investment Trusts, or “REITs”.The appeal of REITs is that they provide investors with the opportunity to profit from real estate, without the need to own property.At the same time, stocks with high dividend yields often carry elevated risks. The following 3 REITs have high dividend yields but also have secure payouts backed by strong cash flow.
Realty Income (O)
Realty Income is a retail real estate-focused REIT that has become famous for its successful dividend growth history and monthly dividend payments. Today, the trust owns thousands of properties. Realty Income owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties.This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment. Realty Income was founded in 1969 and is headquartered in San Diego.On February 20th, 2024, Realty Income Corp reported its financial results for the fourth quarter of 2023. Realty Income (NYSE:O) recently reported its fourth-quarter results, revealing better-than-expected revenue but weaker-than[1]anticipated normalized Funds from Operations (FFO), with the midpoint of its 2023 earnings guidance slightly below Wall Street’s consensus. Following the quarter’s end, the real estate investment trust (REIT) finalized its acquisition of Spirit Realty.For 2024, Realty Income projects a normalized FFO per share ranging from $4.17 to $4.29, with a midpoint of $4.23, compared to the consensus estimate of $4.25 and the $4.00 reported for 2023.Realty Income has increased its dividend for 26 consecutive years, making it a Dividend Aristocrat. Shares have a current yield of 5.6%.
Essex Property Trust (ESS)
Essex Property Trust Inc. invests in West Coast multifamily residential proprieties where it engages in development, redevelopment, management and acquisition of apartment communities and a few other select properties. Essex has ownership interests in several hundred apartment communities consisting of over 60,000 apartment homes.On May 1, 2024, Essex Property Trust, Inc. (ESS) reported strong first-quarter results, reflecting significant growth and strategic advancements. The company announced a notable increase in core Funds from Operations (FFO) per share by 4.9%, which exceeded the initial guidance expectations. This performance was bolstered by a growth in blended lease rates of 2.2%, with renewal leases rising by 3.9% and new leases by 10 basis points.Regionally, Seattle experienced a 3.6% increase in blended rates, while Northern California saw a 2.1% rise, and Southern California reported a 1.7% increase. The company’s occupancy rate stood strong at 96% as of the end of April, and the same-property revenue growth forecast was revised upward by 55 basis points to 2.25% for the full year. Essex also improved its delinquency rate projection to 1.1% of scheduled rent for the year, showcasing faster-than-expected improvements.Furthermore, the company made a significant $505 million investment in a joint venture portfolio which is expected to contribute nearly $2 million to FFO in 2024.Essex Property Trust is a high-quality apartment REIT that has raised its dividend for 30 consecutive years from the time it first became a publicly-traded trust.
CubeSmart (CUBE)
CubeSmart is a self-managed REIT focused primarily on the ownership, operation, management, acquisition, and development of self-storage properties in the United States. The company owns 613 self-storage properties, totaling approximately 44.4 million rentable square feet in the District of Columbia and 24 other states. In addition, the company manages 860 stores for third parties.On April 25th, 2024, CubeSmart reported its Q1 results for the period ending March 31st, 2024. For the quarter, revenues grew by 1.9% to $261.4 million year-over-year. Higher revenues were primarily attributable to revenues generated from property acquisitions and a larger number of managed properties. Same-store revenues came in flat due to a relatively stable number of owned properties. On a per-share basis, FFO came in at $0.64 compared to $0.65 last year.CubeSmart showcases an excellent track record of growing revenues and FFO/share, with management skillfully acquiring lucrative properties and maximizing their potential profitability through operational efficiencies and low-cost financing. Consequently, the company’s FFO/share has grown by around 11.2% on average annually over the past decade.CUBE has increased its dividend for 14 consecutive years with a current yield of 4.8%. We consider CubeSmart’s dividend relatively safe, and comfortable covered by the underlying FFO. The REIT’s expansionary strategy and resilient performance, even during 2020, do not point to any coverage issues whatsoever. The most recent dividend hike of 14% should further reassure investors of its coverage strength.More By This Author:3 Dividend Champions For Rising Passive Income
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