In this article, we will take a look at some of the best dividend stocks in the REIT sector.
Real estate has been the weakest-performing sector in the equity markets over the past five years, both in the US and globally. While high interest rates have played a major role, long-term shifts such as remote work, e-commerce, and home-sharing have added pressure. As a result, investor sentiment has turned negative, with mutual funds and ETFs in Morningstar’s real estate categories seeing significant outflows.
However, value investors often view this kind of pessimism as a potential opportunity. The Morningstar Global Markets ex-US REIT Index has rebounded in 2025, helped by a weaker US dollar. In contrast, the Morningstar US REIT Index has shown mixed performance, holding up during the market’s March and April downturns but trailing the broader rebound in May.
Though real estate stocks gained only 0.9% in May, compared to the broader market’s 6%, some parts of the sector are showing signs of life. According to Wolfe Research, office REITs may be turning a corner. The office REIT sub-sector rose over 5% in May, its first positive month in 2025, suggesting a possible rebound after months of underperformance. Real estate remains sensitive to long-term Treasury yields, which influence borrowing costs, but select dividend-paying REITs may be worth watching. Given this, we will take a look at some of the best dividend stocks in the REIT sector.
Our Methodology
For this list, we scanned Insider Monkey’s database of 1,000 hedge funds as of Q1 2025 and picked REIT companies that pay regular dividends to shareholders. Next, we narrowed down 11 companies that are popular among elite funds at the end of Q1 and ranked them in ascending order of the number of funds that have stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11. Universal Health Realty Income Trust (NYSE:UHT)
Number of Hedge Fund Holders: 9
Universal Health Realty Income Trust (NYSE:UHT) is one of the best dividend stocks in the REIT sector. The company remains relatively under the radar. While there isn’t widespread analysis of its dividend reliability, the company’s strong cash flow plays a key role in supporting its payouts. Over the past twelve months, UHT generated $46.8 million in operating cash flow and $40.04 million in free cash flow.
In the first quarter of 2025 alone, it distributed about $10.2 million in dividends to shareholders.
On June 11, Universal Health Realty Income Trust (NYSE:UHT) announced a quarterly dividend of $0.74 per share, consistent with its previous payment. The trust has increased its dividend for 41 straight years. Although the five-year dividend growth rate is modest at 1.4%, the focus remains on its ability to sustain these payments. As of June 23, the stock offered a dividend yield of 7.22%.
Universal Health Realty Income Trust (NYSE:UHT) operates as a healthcare-focused REIT, owning properties such as acute care and rehabilitation hospitals, medical office buildings, behavioral health centers, sub-acute care facilities, and childcare centers.
10. Arbor Realty Trust, Inc. (NYSE:ABR)
Number of Hedge Fund Holders: 12
Arbor Realty Trust, Inc. (NYSE:ABR) is one of the most prominent stocks in the real estate sector. The mortgage REIT, which focuses on multifamily properties, had been consistently raising its dividend until mid-2023.
However, Arbor Realty Trust, Inc. (NYSE:ABR) paused those increases as rising interest rates began to weigh on the multifamily sector and its earnings. When the REIT last raised its dividend in July 2023, its payout ratio was 75% of its distributable earnings. That figure has since jumped to nearly 150%.
Earnings continued to weaken into 2025, with the company reporting $0.28 per share in distributable earnings for the first quarter, or $0.31 per share when excluding a $7.1 million loss from the sale of two properties. In response, it reduced its dividend to $0.30 per share. If earnings decline further, another cut may be on the table.
That said, the outlook isn’t entirely bleak. While Arbor Realty Trust, Inc. (NYSE:ABR) primarily focuses on low-risk multifamily properties, it also generates income from loan origination and servicing fees, single-family rental properties, and commercial real estate. This diversified revenue base can help Arbor maintain steady income across various phases of the economic cycle.
ABR supports a dividend yield of 11.49%, as of June 23.
9. Innovative Industrial Properties, Inc. (NYSE:IIPR)
Number of Hedge Fund Holders: 21
Innovative Industrial Properties, Inc. (NYSE:IIPR) is among the best dividend stocks in the REIT sector. The company focuses on cannabis-related facilities, mainly grow houses, and operates under a net lease model where tenants handle most property expenses. As the cannabis industry shifts from rapid growth to consolidation, some tenants are struggling to pay rent. Despite these challenges, IIPR has managed to navigate the headwinds fairly well.
One of Innovative Industrial Properties, Inc. (NYSE:IIPR)’s main strengths is its solid balance sheet, with a low debt ratio of 0.15, well below industry averages. This low leverage gives the company flexibility to expand its portfolio and support its dividend.
From 2017 to 2024, its average AFFO payout ratio was around 85%, which is on the higher side for a net lease REIT. A recent lease adjustment with a major tenant is expected to reduce FFO by $0.16 per share, potentially pushing the payout ratio slightly above 90% in 2025. This makes Innovative Industrial Properties, Inc. (NYSE:IIPR)’s strong financial position even more important and helps justify its dividend yield of over 13%.
Innovative Industrial Properties, Inc. (NYSE:IIPR) currently offers a quarterly dividend of $1.90 per share and has been growing its payouts for eight consecutive years.
