Investors have good reason to be concerned about the real-estate market. It has been obvious for decades that the U.S. has too many retail properties, and now, changing work habits promise to put downward pressure on office lease prices for years to come. But there are always companies that are expected to buck the trends.
Below is a screen of real-estate investment trusts, highlighting 20 whose dividend yields appear well supported by expected cash flow and which are expected to increase cash flow available to support dividends through 2025.
Earlier this week we presented a broad screen of dividend stocks in the S&P 500 that excluded REITs.
That previous screen was based on current dividend yields and consensus estimates for free cash flow (FCF) among analysts polled by FactSet. FCF is remaining cash flow after capital expenditures. It is money that can be used to increase dividends, repurchase shares or expand or for other corporate purposes. That screen was sorted by FCF yield “headroom” over current dividends, because many things can be done with the extra cash flow to support shareholder value over the long term.
REITs have tax advantages — income taxes are avoided at the corporate level if at least 90% of earnings are passed through to shareholders through dividend payments. So REITs are generally considered current-income investments. An investor hopes to see the dividend payouts increase over time. So the REITs listed below are sorted by dividend yield.
In the REIT industry, funds from operations (FFO) is generally considered a useful figure to measure dividend-paying ability. FFO adds depreciation and amortization (noncash figures) back to earnings, while netting out gains on the sale of property. We can take the idea further by looking at adjusted funds from operations (AFFO), which nets out costs to maintain properties that REITs rent out.
If we divide the consensus AFFO estimate by the current share price, we have an estimated AFFO yield, which can be compared with the dividend yield to see if there is headroom to provide comfort that the current dividend can be maintained, or maybe to point to a dividend increase.
REIT stock screen
For a broad screen of the REIT space, we began with the Russell 3000 Index
RUA,
+0.28%,
which is designed to represent about 98% of companies that are publicly listed in the U.S. The index includes 177 REITs of all types. There are two broad categories for REITs: Equity REITs own and rent out properties or sell them for a profit after acquiring, developing or improving them. TMortgage REITs are primarily lenders or investors in mortgage-backed securities.
It so happens that all the REITs that made our final list of 20 stocks are equity REITs. We looked up the investment concentrations of all the REITs. They don’t always fit into neat categories of retail, multifamily or office, but the list below includes the main concentration of each REIT that passed the screen.
If you see any REITs of interest, don’t assume these investment-concentration categories are sufficient to back an investment decision. You should do your own research on any REIT you consider for investment, just as you should for anything else you are thinking of buying. In its annual report, every REIT describes its investment philosophy, property concentrations and outlook for its tenants.
This is how we narrowed down the list of 177 REITs in the Russell 3000 Index:
- Each company has to be covered by at least five analysts polled by FactSet, with consensus AFFO estimates available through 2025. This brought the list down to 72 companies.
- The AFFO yield, based on consensus estimates for the next 12 months, shows expected headroom of at least 1% over the current dividend yield.
- Full-year AFFO is expected to increase in 2024 and 2025.
Applying these filters left 42 REIT stocks that passed the screen. Here are the 20 with the highest current dividend yields:
| REIT | Ticker | Investment property concentration | Dividend yield | Estimated 12-month AFFO yield | Estimated 12-month headroom |
| Sabra Healthcare REIT Inc. |
SBRA, -0.76% |
Healthcare | 10.11% | 11.67% | 1.56% |
| Global Medical REIT Inc. |
GMRE, -1.07% |
Healthcare | 8.99% | 10.22% | 1.22% |
| CTO Realty Growth Inc. |
CTO, -2.39% |
Retail | 8.84% | 9.88% | 1.04% |
| City Office REIT Inc. |
CIO, -4.51% |
Office | 7.22% | 10.59% | 3.37% |
| LTC Properties Inc. |
LTC, -0.97% |
Senior housing | 6.70% | 8.15% | 1.46% |
| Spirit Realty Capital Inc. |
SRC, -1.53% |
Retail | 6.56% | 8.98% | 2.41% |
| Gaming & Leisure Properties Inc. |
GLPI, -0.76% |
Leisure | 5.73% | 7.36% | 1.63% |
| CareTrust REIT Inc. |
CTRE, -0.70% |
Healthcare | 5.63% | 7.97% | 2.34% |
| RPT Realty |
RPT, -2.23% |
Retail | 5.32% | 6.63% | 1.31% |
| Four Corners Property Trust Inc. |
FCPT, -0.98% |
Retail | 5.10% | 6.36% | 1.26% |
| NNN REIT Inc. |
NNN, -0.70% |
Retail | 5.04% | 7.54% | 2.51% |
| Realty Income Corp. |
O, -0.21% |
Retail | 5.02% | 6.68% | 1.67% |
| Apartment Income REIT Corp. |
AIRC, -0.92% |
Apartment communities | 4.92% | 6.05% | 1.13% |
| Getty Realty Corp. |
GTY, -0.62% |
Retail | 4.84% | 6.31% | 1.47% |
| VICI Properties Inc. |
VICI, -0.78% |
Leisure | 4.80% | 6.67% | 1.87% |
| Corporate Office Properties Trust |
OFC, -1.90% |
Office | 4.65% | 6.81% | 2.15% |
| Agree Realty Corp. |
ADC, +0.12% |
Retail | 4.44% | 6.10% | 1.66% |
| Elme Communities |
ELME, -1.55% |
Apartment communities | 4.37% | 5.71% | 1.34% |
| Retail Opportunity Investment Corp. |
ROIC, -2.76% |
Retail | 4.35% | 5.91% | 1.56% |
| Netstreit Corp. |
NTST, -0.67% |
Retail | 4.32% | 6.71% | 2.39% |
| Source: FactSet | |||||
Click on the tickers for more about each company.
Two quick points about dividend yields: A high dividend yield indicates that some investors are shying away from a stock out of fear the dividend may be cut. A screen provides no guarantees and points to the need for further research. The lower yields on the list might seem unimpressive at a time when you can get 5% in a bank CD with insurance coverage from the Federal Deposit Insurance Corp. But when that CD matures, yields may be much lower.
Here’s the list again in the same order, this time showing market capitalization, the current annual dividend payout rates and consensus AFFO-per-share estimates for 2023, 2024 and 2025:
| REIT | Ticker | Market cap. ($mil) | Annual dividend rate | Estimated 2023 AFFO | Estimated 2024 AFFO | Estimated 2025 AFFO |
| Sabra Healthcare REIT Inc. |
SBRA, -0.76% |
$2,744 | $1.20 | $1.34 | $1.43 | $1.51 |
| Global Medical REIT Inc. |
GMRE, -1.07% |
$612 | $0.84 | $0.94 | $1.02 | $1.04 |
| CTO Realty Growth Inc. |
CTO, -2.39% |
$390 | $1.52 | $1.64 | $1.81 | $2.03 |
| City Office REIT Inc. |
CIO, -4.51% |
$221 | $0.40 | $0.57 | $0.61 | $0.70 |
| LTC Properties Inc. |
LTC, -0.97% |
$1,410 | $2.28 | $2.76 | $2.87 | $2.98 |
| Spirit Realty Capital Inc. |
SRC, -1.53% |
$5,708 | $2.65 | $3.58 | $3.68 | $3.77 |
| Gaming & Leisure Properties Inc. |
GLPI, -0.76% |
$13,191 | $2.88 | $3.67 | $3.73 | $3.81 |
| CareTrust REIT Inc. |
CTRE, -0.70% |
$1,979 | $1.12 | $1.51 | $1.66 | $1.75 |
| RPT Realty |
RPT, -2.23% |
$913 | $0.56 | $0.69 | $0.71 | $0.76 |
| Four Corners Property Trust Inc. |
FCPT, -0.98% |
$2,320 | $1.36 | $1.67 | $1.73 | $1.81 |
| NNN REIT Inc. |
NNN, -0.70% |
$7,952 | $2.20 | $3.26 | $3.35 | $3.45 |
| Realty Income Corp. |
O, -0.21% |
$41,067 | $3.06 | $3.99 | $4.18 | $4.38 |
| Apartment Income REIT Corp. |
AIRC, -0.92% |
$5,461 | $1.80 | $2.12 | $2.26 | $2.47 |
| Getty Realty Corp. |
GTY, -0.62% |
$1,758 | $1.72 | $2.23 | $2.28 | $2.41 |
| VICI Properties Inc. |
VICI, -0.78% |
$32,638 | $1.56 | $2.13 | $2.22 | $2.32 |
| Corporate Office Properties Trust |
OFC, -1.90% |
$2,755 | $1.14 | $1.63 | $1.75 | $1.83 |
| Agree Realty Corp. |
ADC, +0.12% |
$6,123 | $2.92 | $3.95 | $4.10 | $4.30 |
| Elme Communities |
ELME, -1.55% |
$1,446 | $0.72 | $0.95 | $0.99 | $1.03 |
| Retail Opportunity Investment Corp. |
ROIC, -2.76% |
$1,737 | $0.60 | $0.80 | $0.83 | $0.86 |
| Netstreit Corp. |
NTST, -0.67% |
$1,128 | $0.80 | $1.22 | $1.27 | $1.30 |
| Source: FactSet | ||||||
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