Which REIT pays the best dividend?
Real estate investment trusts (REITs) are an investment that offers steady income. There are a handful of REITs that pay dividends on a monthly basis. Some of the most well-known monthly dividend payers include Realty Income (O), AGNC Investment Corp. (AGNC), and STAG Industrial (STAG).
| Symbol | Company | REIT performance (1-year total return) |
|---|---|---|
| DHC | Diversified Healthcare Trust | 242.63% |
| AOMR | Angel Oak Mortgage Inc. | 66.84% |
| SKT | Tanger Outlets | 59.56% |
| SLG | SL Green Realty Corp. | 57.13% |
| Stock | Forward dividend yield |
|---|---|
| Exxon Mobil Corp. (XOM) | 3.5% |
| Johnson & Johnson (JNJ) | 3% |
| Procter & Gamble Co. (PG) | 2.3% |
| Home Depot Inc. (HD) | 2.4% |
- Pfizer Inc. (NYSE:PFE) Dividend Yield as of March 12: 5.42% ...
- Truist Financial Corporation (NYSE:TFC) Dividend Yield as of March 12: 5.6% ...
- Realty Income Corporation (NYSE:O) Dividend Yield as of March 12: 5.80% ...
- Kinder Morgan, Inc. (NYSE:KMI) ...
- AT&T Inc. (NYSE:T)
Real estate investment trusts (REITs) are an investment that offers steady income. There are a handful of REITs that pay dividends on a monthly basis. Some of the most well-known monthly dividend payers include Realty Income (O), AGNC Investment Corp. (AGNC), and STAG Industrial (STAG).
Since REITs are required by the IRS to pay out 90% of their taxable income to shareholders, REIT dividends are often much higher than the average stock on the S&P 500. One of the best ways to receive passive income from REITs is through the compounding of these high-yield dividends.
Analysts and talk show hosts may be bullish on REITs at the start of 2024, but it's necessary to address some drawbacks and potential downsides. Like any stock, the price of a REIT can roller coaster up and down with the market. While threats of a looming recession are fading, the market is always unpredictable.
Risks of investing in REITs include higher dividend taxes, sensitivity to interest rates, and exposure to specific property trends.
With rate cuts on the horizon, many publicly traded REITs have rebounded, and the industry as a whole seems well-poised for a recovery in the coming year. Ultimately, the decision on whether or not to buy REITs will depend on the specific circ*mstances and risk tolerance of each investor.
| Company | Dividend Yield |
|---|---|
| Big 5 Sporting Goods Corp (BGFV) | 18.57% |
| Medifast Inc (MED) | 13.50% |
| Entravision Communications Corp. (EVC) | 13.29% |
| Arbor Realty Trust Inc. (ABR) | 13.28% |
What are the top 5 dividend stocks to buy?
| Stock | Dividend yield* |
|---|---|
| 3M Co. (MMM) | 6.5% |
| Kinder Morgan Inc. (KMI) | 6.6% |
| AT&T Inc. (T) | 6.7% |
| Verizon Communications Inc. (VZ) | 6.7% |
| Name | Price | Price Change |
|---|---|---|
| IBM International Business Machines | $191.95 | $1.11 (0.57%) Pre 0.41% |
| CVX Chevron | $149.59 | $0.71 (0.48%) Pre 0.36% |
| EOG EOG Resources | $116.20 | $0.37 (0.32%) |
| ET Energy Transfer | $15.02 | $0.12 (0.81%) Pre 0.63% |
Many financial experts recommend that you reinvest dividends most of the time – and I'm inclined to agree. The process is typically automated, doesn't incur any fees and gives your holdings a little (or a lot) of extra oomph.
| COMPANY | SECTOR | DIVIDEND YIELD |
|---|---|---|
| Cisco Systems Inc. (CSCO) | Technology | 3.15% |
| Comcast Corp. (CMCSA) | Communication services | 2.91% |
| Skyworks Solutions (SWKS) | Technology | 2.59% |
| Marathon Petroleum Corp. (MPC) | Energy | 1.95% |
- Enbridge: 7.8% dividend yield. ...
- Kinder Morgan: 6.5% dividend yield. ...
- Rithm Capital: 9.1% dividend yield. ...
- Altria: 9.6% dividend yield. ...
- Verizon Communications: 6.6% dividend yield.
In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments.
The value of a REIT is based on the real estate market, so if interest rates increase and the demand for properties goes down as a result, it could lead to lower property values, negatively impacting the value of your investment.
| # | Name | C. |
|---|---|---|
| 1 | Prologis 1PLD | 🇺🇸 |
| 2 | American Tower 2AMT | 🇺🇸 |
| 3 | Equinix 3EQIX | 🇺🇸 |
| 4 | Simon Property Group 4SPG | 🇺🇸 |
Dividends are particularly valuable in retirement because they provide a consistent stream of income that can help cover living expenses. And, unlike bonds, dividend stocks offer the potential for capital gains as well as income. That means your portfolio can continue to grow even as you withdraw money from it.
Income-minded investors won't find a much higher-paying option right now than AGNC Investment (AGNC 1.04%), with its dividend yield of almost 15%. That's a much higher yearly payout than the stock market's average annual gain.
Are REITs better than dividend stocks?
REITs have outperformed stocks on 20-to-50-year horizons. Most REITs are less volatile than the S&P 500, with some only half as volatile as the market at large. Several individual REITs delivered significantly higher returns than the S&P 500.
To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
Notable REITs
The five largest REITs in the United States in 2021 are: American Tower Corporation, Prologis, Crown Castle International, Simon Property Group and Weyerhaeuser.
As we dive into 2024, the Fed's accommodative approach to tackling inflation is likely to provide an impetus to the REIT sector, which depends highly on the debt market to carry out business activities. These companies benefit from lower borrowing costs. Moreover, low interest rates contribute to higher valuations.
Any increase in the short-term interest rate eats into the profit—so if it doubled in our example above, there'd be no profit left. And if it goes up even higher, the REIT loses money. All of that makes mortgage REITs extremely volatile, and their dividends are also extremely unpredictable.
