In this article, we discuss 10 high yield REIT dividend stocks for 2022.
REIT dividend stocks offer investors a reliable source of passive income, and due to the high yields often delivered by real estate investment trusts, income-oriented investors seek to diversify their portfolios with these stocks. REITs offer dividend payouts that usually increase over the years and generally grow faster than the rate of inflation. Real estate investment trusts are structured in a way that they distribute at least 90 percent of their taxable income to shareholders as dividends, which makes REIT dividend stocks of great interest to smart investors.
As of December 2021, the average yield for REITs stood at 2.9%, which is double the 1.3% average yield of the S&P 500 index. REITs are expected to deliver a strong performance in 2022, due to the economic growth in the United States and increasing demand for rental space, in addition to higher rental payments.
Real estate investment trusts tend to perform well during inflationary periods, since they can hike rents and pass the increased income onto shareholders. This makes REITs a strong hedge against inflation, and heading into 2022, it is a good idea to diversify investment portfolios with inflation-protected stocks such as dividend REITs. In June 2021, roughly $1.5 trillion was invested in American REITs, and these stocks remain a top priority for retirees looking to build a steady income portfolio.
In addition to diversifying portfolios with leading high yield REIT dividend stocks, investors should hold on to a mixed income portfolio with securities like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Johnson & Johnson (NYSE:JNJ).
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Our Methodology
We created a list of high yield REIT dividend stocks publicly listed in the United States. For each stock, we have mentioned the dividend yield, latest dividend payout, and the hedge fund sentiment around the holdings.
High Yield REIT Dividend Stocks for 2022
10. PennyMac Mortgage Investment Trust (NYSE:PMT)
Dividend Yield as of January 25: 10.74%
Number of Hedge Fund Holders: 10
PennyMac Mortgage Investment Trust (NYSE:PMT) is a specialty real estate investment trust and finance company that invests mainly in residential mortgage loans and mortgage-related assets. PennyMac Mortgage Investment Trust provides shareholder returns via dividends and capital appreciation.
On December 8, PennyMac Mortgage Investment Trust declared a quarterly dividend of $0.47 per share, in line with previous. The dividend is payable on January 31, to shareholders of record on December 31.
BTIG analyst Eric Hagen upgraded PennyMac Mortgage Investment Trust on January 7 to Buy from Neutral with an $18.50 price target. The analyst expects the government sponsored enterprises to re-engage in credit risk transfer transactions with mortgage originators later this year.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 10 funds were bullish on PennyMac Mortgage Investment Trust, with stakes totaling $7.38 million, as compared to 11 funds holding stakes worth $10.4 million in PennyMac Mortgage Investment Trust in the preceding quarter.
Ken Griffin’s Citadel Investment Group is the largest PennyMac Mortgage Investment Trust stakeholder, with 120,896 shares worth $2.38 million.
9. Annaly Capital Management, Inc. (NYSE:NLY)
Dividend Yield as of January 25: 11.38%
Number of Hedge Fund Holders: 15
Annaly Capital Management, Inc. (NYSE:NLY) is a New York-based mortgage real estate investment trust with $94 billion in total assets. Annaly Capital Management, Inc.’s portfolio of assets includes securities, equity-based mortgage finance, and corporate middle market lending. In the third quarter of 2021, Annaly Capital Management, Inc. beat market consensus estimates for EPS, but missed on revenue.
According to Insider Monkey’s Q3 database, Interval Partners is one of the leading Annaly Capital Management, Inc. stakeholders, with a $4.5 million position. Overall, 15 hedge funds were long Annaly Capital Management, Inc. in Q3 2021, with stakes equaling approximately $35 million.
REITs like Annaly Capital Management, Inc. are a good addition to diversify income portfolios that hold stocks like Microsoft Corporation, Apple Inc., and Johnson & Johnson.
8. Western Asset Mortgage Capital Corporation (NYSE:WMC)
Dividend Yield as of January 25: 11.43%
Number of Hedge Fund Holders: 9
Western Asset Mortgage Capital Corporation (NYSE:WMC) is headquartered in Pasadena, California, and the REIT’s core investment strategy is focused on residential real estate related investments, such as non-qualified mortgage loans, non-agency residential mortgage-backed securities, and other related investments.
Western Asset Mortgage Capital Corporation on December 21 declared a $0.06 quarterly dividend per share, in line with previous. The dividend was paid on January 26, to shareholders of record on December 31.
A total of 9 hedge funds in the Q3 database of Insider Monkey were long Western Asset Mortgage Capital Corporation, with stakes amounting to $20.6 million. John Overdeck and David Siegel’s Two Sigma Advisors is one of the leading stakeholders of Western Asset Mortgage Capital Corporation, owning 740,610 shares worth $1.93 million.
7. Ellington Residential Mortgage REIT (NYSE:EARN)
Dividend Yield as of January 25: 11.43%
Number of Hedge Fund Holders: 10
Ellington Residential Mortgage REIT (NYSE:EARN) is a mortgage real estate investment trust that manages residential mortgage and real estate assets. The securities held by Ellington Residential Mortgage REIT are mostly guaranteed by a U.S. government enterprise.
Ellington Residential Mortgage REIT on January 7 declared a $0.10 per share monthly dividend, in line with previous. The dividend is payable on February 25, to shareholders of record on January 31.
In Q3 2021, among the hedge funds tracked by Insider Monkey, Renaissance Technologies is the biggest stakeholder of Ellington Residential Mortgage REIT, with 582,700 shares worth $6.5 million. Overall, 10 hedge funds reported owning stakes in Ellington Residential Mortgage REIT, totaling $18.1 million.
6. Ready Capital Corporation (NYSE:RC)
Dividend Yield as of January 25: 11.88%
Number of Hedge Fund Holders: 13
Ready Capital Corporation (NYSE:RC), a mortgage REIT that was established in 2011, is a notable high yield dividend REIT for 2022, offering an 11.88% yield. Ready Capital Corporation caps its loans at $45 million, investing in multifamily and commercial real estate, offering bridge loans and fixed rate financings for stable assets.
Ready Capital Corporation declared a $0.42 per share quarterly dividend on December 14, in line with previous. The dividend will be paid on January 31, to shareholders of record on December 31.
On January 12, Ready Capital Corporation announced that it has priced an upsized public offering of 7 million common shares for total gross proceeds of approximately $108.9 million. The program’s closing date was January 14, and net proceeds will be utilized to originate or acquire target assets consistent with Ready Capital Corporation’s investment strategy.
Riley analyst Matt Howlett raised the price target on Ready Capital Corporation to $18 from $17 and reiterated a Buy rating on the shares on December 3. The company is well positioned for rising interest rates and there is marginal upside to estimates if Ready Capital Corporation can lower its cost of capital quicker than forecast, the analyst told investors in a research note.
In the third quarter of 2021, Thomas Steyer’s Farallon Capital was the biggest Ready Capital Corporation stakeholder, with 1.25 million shares worth $18 million. Overall, 13 hedge funds were bullish on Ready Capital Corporation as of Q3 2021, holding stakes totaling $45.7 million.
Like Microsoft Corporation, Apple Inc., and Johnson & Johnson, Ready Capital Corporation is a notable addition to income portfolios.
5. Two Harbors Investment Corp. (NYSE:TWO)
Dividend Yield as of January 25: 12.27%
Number of Hedge Fund Holders: 31
Founded in 2009, Two Harbors Investment Corp. (NYSE:TWO) is an internally managed real estate investment trust based in Minnesota.
Two Harbors Investment Corp. on December 16 declared a $0.17 per share quarterly dividend, in line with previous, payable on January 28.
Citi analyst Arren Cyganovich initiated coverage of Two Harbors Investment Corp. on January 4 with a Neutral rating and a $5.50 price target. The analyst has a positive view of Two Harbors Investment Corp.’s strategy and internally managed structure, but cites near-term risks from the Federal Reserve’s reduction in agency mortgage backed security purchases and potentially rising interest rates.
John Overdeck and David Siegel’s Two Sigma Advisors is one of the leading Two Harbors Investment Corp. stakeholders from the third quarter of 2021, with a position worth roughly $28 million. Overall, 31 hedge funds were bullish on Two Harbors Investment Corp. in Q3 2021, with stakes totaling $155.6 million.
4. ARMOUR Residential REIT, Inc. (NYSE:ARR)
Dividend Yield as of January 25: 12.77%
Number of Hedge Fund Holders: 6
ARMOUR Residential REIT, Inc. (NYSE:ARR) is a Maryland-based real estate investment trust that invests primarily in residential mortgage backed securities issued or guaranteed by a United States government-sponsored entity, such as Fannie Mae, Freddie Mac, or Ginnie Mae.
On January 4, ARMOUR Residential REIT, Inc. declared a $0.10 per share monthly dividend, in line with previous. The dividend will be distributed on January 28, to shareholders of record on January 18.
JonesTrading analyst Jason Stewart on October 28 downgraded ARMOUR Residential REIT, Inc. to Hold from Buy and removed his prior price target after the company’s distributable earnings miss. With the shares effectively trading at book value per share, the analyst sees the risk versus reward as balanced at current levels.
According to Insider Monkey’s Q3 data, 6 hedge funds reported owning stakes in ARMOUR Residential REIT, Inc., amounting to $23 million, as compared to 13 funds holding stakes worth $32.2 million in ARMOUR Residential REIT, Inc. in the prior quarter. David Harding’s Winton Capital Management is a notable shareholder of ARMOUR Residential REIT, Inc., owning a $1.92 million stake.
3. Cherry Hill Mortgage Investment Corporation (NYSE:CHMI)
Dividend Yield as of January 25: 13.43%
Number of Hedge Fund Holders: 5
Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) is a diversified, hybrid residential mortgage REIT with a portfolio focused on mortgage servicing rights, agency residential mortgage backed securities, and other residential mortgage assets. Cherry Hill Mortgage Investment Corporation delivers a 13.43% dividend yield as of January 25.
On December 9, Cherry Hill Mortgage Investment Corporation declared a quarterly dividend of $0.27, in line with previous. The dividend was distributed on January 25, to shareholders of record on December 31.
In August 2021, RBC Capital analyst Michael Carroll downgraded Cherry Hill Mortgage Investment Corporation to Sector Perform from Outperform with a price target of $24, down from $26. The analyst noted that while the company reported an “in-line” quarter with solid rent collections and a healthy investment pace, some potential concerns are beginning to “percolate” and may result in delayed rent payments.
A total of 5 hedge funds in the Q3 database of Insider Monkey were bullish on Cherry Hill Mortgage Investment Corporation, with stakes equaling $12.2 million. Renaissance Technologies is the leading stakeholder of the REIT from the third quarter of 2021, holding 807,684 shares worth $7.1 million.
2. Invesco Mortgage Capital Inc. (NYSE:IVR)
Dividend Yield as of January 25: 13.79%
Number of Hedge Fund Holders: 10
Invesco Mortgage Capital Inc. (NYSE:IVR) is an REIT based in Atlanta, Georgia, which focuses on investing in mortgage-backed securities and other mortgage-related assets that are guaranteed by the US government agencies. Invesco Mortgage Capital Inc. beat market consensus estimates for earnings and revenue in the third quarter of 2021.
Invesco Mortgage Capital Inc. on December 27 declared a $0.09 per share quarterly dividend, in line with previous. The dividend is payable on January 27, to shareholders of record on January 11.
In the third quarter of 2021, 10 hedge funds tracked by Insider Monkey’s database of elite funds were long Invesco Mortgage Capital Inc., with stakes totaling approximately $36 million. Beach Point Capital Management is one of the leading stakeholders of Invesco Mortgage Capital Inc., with 3.1 million shares worth approximately $10 million.
1. Orchid Island Capital, Inc. (NYSE:ORC)
Dividend Yield as of January 25: 16.71%
Number of Hedge Fund Holders: 10
Orchid Island Capital, Inc. (NYSE:ORC) is a Florida-based specialty finance company that invests in residential mortgage-backed securities in the United States.
JonesTrading analyst Jason Stewart on January 24 upgraded Orchid Island Capital, Inc. to Buy from Hold with a $4.25 price target.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 10 funds were bullish on Orchid Island Capital, Inc., with stakes totaling $16.1 million. Balyasny Asset Management is the biggest stakeholder of Orchid Island Capital, Inc., with 1.7 million shares worth $8.4 million.
You can also take a look at 10 Best Dividend Stocks According to Thomas Steyer’s Farallon Capital and Charlie Munger’s Daily Journal Portfolio: Top Stock Picks.
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This article is originally published at Insider Monkey.
