In this article, we discuss 10 best REIT dividend stocks.
Over the years, the real estate investment trust (REIT) sector in the US expanded into a wide range of diverse assets. In 2021, the sector performed well after recovering from the ills of the pandemic a year before. Morgan Stanley mentioned in a report that global listed real estate markets returned 27.2% in 2021, citing data from FTSE EPRA Nareit Developed Index. In addition to this, the REIT sector also contributes significantly to the national GDP. According to a report by Ernst & Young, the sector generates nearly $197 billion in labor income through 3 million jobs. Moreover, the REITs in the US own real estate assets worth over $3.5 trillion.
The sector is increasingly becoming popular among investors as it offers relatively high dividend yields, which is rewarding in times of financial instability. From 2015 to 2020, the average dividend yield of the Dow Jones US Select REIT Index was 3.7%, compared with a 2% average yield of the S&P 500, as reported by S&P Global. Besides offering high yields, these companies earn stable streams of income from long-tenant leases and also distribute 90% of their taxable income in dividends to shareholders. According to a report by Nareit, distributed dividends and interest payments supported $26.1 billion in labor income during the second quarter of 2022. The report also mentioned that the sector distributed dividends worth over $92.3 billion in 2021.
Over the years, the returns of the REIT sector are also worth noticing as it outperformed its peers. As reported by CBRE Investment Management, US REITs delivered an average annual return of 10.8% in the last 20 years ending November 2021. In comparison, other global equities returned 6.8% during the same period. This year, dividend stocks like PepsiCo, Inc. (NASDAQ:PEP), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) are gaining ground among investors due to their decades-long dividend growth streaks and strong balance sheets. However, we will discuss the best REIT dividend stocks in this article.
Stuart Monk / shutterstock.com
Our Methodology:
For this list, we selected stocks from the REIT sector that pay dividends to shareholders. We analyzed metrics like dividend policies, balance sheets, and overall financial health to shortlist some of the best dividend stocks in the REIT sector. The stocks are ranked according to their dividend yields, as recorded on October 11.
Best REIT Dividend Stocks
10. Equity LifeStyle Properties, Inc. (NYSE:ELS)
Dividend Yield as of October 11: 2.73%
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a Chicago-based real estate investment trust company that maintains the highest quality portfolio of home resort communities, retirement communities, and rental homes. The company reported an operating cash flow of over $177 million in Q2 2022, up from $124.6 million during the same period last year. Its free cash flow stood at $80 million, compared with $40.3 million in the prior-year quarter. The company generated $365.3 million in revenues during the quarter, which showed a 10.7% year-over-year growth.
On July 26, Equity LifeStyle Properties, Inc. (NYSE:ELS) declared a quarterly dividend of $0.41 per share, in line with its previous dividend. The company has raised its dividends at a CAGR of 11.03% in the last five years, which makes it one of the best dividend stocks in the REIT sector. As of October 11, the stock’s dividend yield stood at 2.73%.
In October, Barclays reiterated its Overweight rating on Equity LifeStyle Properties, Inc. (NYSE:ELS) with a $75 price target. The firm expects higher yields on the long-term fixed-rate debt.
At the end of Q2 2022, 21 hedge funds tracked by Insider Monkey owned stakes in Equity LifeStyle Properties, Inc. (NYSE:ELS), down from 23 a quarter earlier. The collective value of these stakes is over $180 million. Marshall Wace LLP was the company’s leading stakeholder in Q2.
In addition to some of the best dividend stocks like PepsiCo, Inc. (NASDAQ:PEP), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), Equity LifeStyle Properties, Inc. (NYSE:ELS) is also getting the attention of income investors in 2022.
Baron Funds mentioned Equity LifeStyle Properties, Inc. (NYSE:ELS) in its Q2 2022 investor letter. Here is what the firm has to say:
“Equity Lifestyle Properties is part of a niche real estate category that we expect to continue to benefit from favorable demand and supply dynamics. The company is the beneficiary of strong demand from budget-conscious home buyers such as retirees and millennials, and negligible new inventory due to high development barriers. Demand for affordable outdoor vacations (recreational vehicles) also remains strong. Equity Lifestyle Properties has strong long-term cash flow growth prospects and low capital expenditure needs. If the macroeconomic environment worsens, we expect business results to be resilient due to each company’s focus on affordable housing and affordable outdoor vacations.”
9. American Tower Corporation (NYSE:AMT)
Dividend Yield as of October 11: 3.10%
American Tower Corporation (NYSE:AMT) is a Boston-based real estate investment trust company that owns and operates properties related to communications infrastructure. On September 22, the company announced a 3% hike in its quarterly dividend to $1.47 per share. This was the company’s 11th consecutive year of dividend growth, which places it as one of the best dividend stocks on our list. As of October 11, the stock has a dividend yield of 3.10%.
In October, KeyBanc maintained its Overweight rating on American Tower Corporation (NYSE:AMT) with a $264 price target. The firm presented a constructive outlook on the sector as leasing trends remain strong in the US.
At the end of June 2022, 52 hedge funds tracked by Insider Monkey owned stakes in American Tower Corporation (NYSE:AMT), up from 50 in the previous quarter. These stakes are valued at over $4.37 billion. Charles Akre and Ken Fisher were the company’s most prominent stakeholders in Q2.
Baron Funds mentioned American Tower Corporation (NYSE:AMT) in its Q2 2022 investor letter. Here is what the firm has to say:
“American Tower is a leading global tower company with 220,000 communication sites globally and over 40,000 in the U.S. We added to our position during the market dislocation and as it became increasingly clear that the company would put permanent equity financing in place at better-than-expected terms for its previously announced acquisition of CoreSite (thereby removing the “equity overhang”).
In addition, the company stepped back from a large potential deal in Europe, which would have required significant incremental funding, due to unfavorable contract terms and price. This decision further reinforced our confidence in management’s capital allocation discipline knowing that these were highly sought-after assets.”
8. Prologis, Inc. (NYSE:PLD)
Dividend Yield as of October 11: 3.20%
Prologis, Inc. (NYSE:PLD) is an American real estate investment trust company, headquartered in California. It is one of the largest industrial real estate companies in the world. In October, Citigroup initiated its coverage on the stock with a Buy rating and a $120 price target. The firm appreciated the company’s strong coastal infill industrial fundamentals and lower cost of capital compared with its peers.
In the second quarter of 2022, Prologis, Inc. (NYSE:PLD) reported an operating cash flow of $804 million, down from $814 million during the same period last year. The company’s average occupancy came in at 97.6% with $846 million worth of acquisitions. It ended the quarter with $5.2 billion in cash and availability on its credit facilities.
Prologis, Inc. (NYSE:PLD) currently pays a quarterly dividend of $0.79 per share, with a dividend yield of 3.20%, as of October 11. The company holds an eight-year track record of dividend growth, coming through as one of the best dividend stocks in the REIT sector.
The number of hedge funds presenting a bullish stance on Prologis, Inc. (NYSE:PLD) stood at 49 in Q2 2022, jumping from 37 in the previous quarter, according to Insider Monkey’s data. The collective value of stakes owned by these hedge funds is over $941.5 million.
Carillon Tower Advisers mentioned Prologis, Inc. (NYSE:PLD) in its Q2 2022 investor letter. Here is what the firm has to say:
“Prologis, Inc. (NYSE:PLD) underperformed due to supply and demand concerns following the announcement that a major online retailer is slowing the rollout of new warehouses. However, we continue to believe that there is overwhelming demand for the company’s assets.”
7. NexPoint Residential Trust, Inc. (NYSE:NXRT)
Dividend Yield as of October 11: 3.77%
NexPoint Residential Trust, Inc. (NYSE:NXRT) is a Texas-based company that is involved in the acquisition of middle-income and multifamily properties in large cities in the US. The company has been raising its dividends consistently for the past six years, with a five-year dividend CAGR of 11.55%. Its consistent dividend payments make the company one of the best dividend stocks on our list. As of October 10, the stock’s dividend yield came in at 3.77%.
In Q2 2022, NexPoint Residential Trust, Inc. (NYSE:NXRT) reported revenue of $65.8 million, up from $52.6 million during the same period last year. The company generated $30 million in operating cash flows, compared with $27 million in the prior-year quarter. Its net operating income for the quarter was $38.8 million on 41 properties, up from $30.2 million for Q2 2021 on 39 properties.
In September, JMP Securities initiated its coverage on NexPoint Residential Trust, Inc. (NYSE:NXRT) with an Outperform rating and a $70 price target. The firm highlighted the company’s net operating income growth, value-add properties, and outsized returns.
At the end of June 2022, NexPoint Residential Trust, Inc. (NYSE:NXRT) was a part of 7 hedge fund portfolios in Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $138 million. Highland Capital Management was the company’s leading stakeholder among these hedge funds.
Baron Funds mentioned NexPoint Residential Trust, Inc. (NYSE:NXRT) in its Q2 2022 investor letter. Here is what the firm has to say:
“Despite strong quarterly results and an encouraging update from management, the shares of NexPoint Residential Trust, Inc., a sunbelt focused apartment REIT, declined in the most recent quarter alongside most other REITs. At its recent price of only $62, we believe the shares are valued at a significant discount to its private market value and remain optimistic about the company’s prospects.” (Click here to view the full text)
6. Crown Castle Inc. (NYSE:CCI)
Dividend Yield as of October 11: 4.43%
Crown Castle Inc. (NYSE:CCI) is a Texas-based real estate investment trust company that also provides shared communication infrastructure in the US. In Q2 2022, the company reported an operating cash flow of $780 million, compared with $622 million during the same period last year. The company paid dividends worth $637 million during the quarter, an increase of 11% from the prior-year period.
Crown Castle Inc. (NYSE:CCI) has been raising its dividends for the past seven years consistently, which makes it one of the best dividend stocks on our list. Moreover, in the last two consecutive years, the company met its dividend growth rate target. As of October 11, the company’s shares boast a yield of 4.43%.
In October, KeyBanc maintained its Overweight rating on Crown Castle Inc. (NYSE:CCI) with a $177 price target. The firm highlighted the strong leasing trends in the US. The company can be a good addition to dividend portfolios along with famous dividend stocks like PepsiCo, Inc. (NASDAQ:PEP), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).
At the end of the June quarter, 48 hedge funds tracked by Insider Monkey owned stakes in Crown Castle Inc. (NYSE:CCI), compared with 50 in the previous quarter. These stakes have a combined value of over $1.42 billion.
ClearBridge Investment mentioned Crown Castle Inc. (NYSE:CCI) in its Q1 2022 investor letter. Here is what the firm has to say:
“U.S. communications company Crown Castle International (NYSE:CCI) was the largest detractor from quarterly performance. Crown Castle is the leading independent owner and operator of wireless communications infrastructure in the U.S. with a portfolio of approximately 40,000 towers. The stock underperformed as, driven by rising interest rates, investors rotated away from defensive into more value-oriented sectors. Communications infrastructure remains attractive, however, as companies continue to deploy greater capital spend to support the strong tailwinds from 5G.”
5. CubeSmart (NYSE:CUBE)
Dividend Yield as of October 11: 4.51%
CubeSmart (NYSE:CUBE) is an American self-managed real estate investment trust company that operates 1,200 self-storage facilities. In Q2 2022, the company posted an operating cash flow of $154 million, compared with $125.5 million during the same period last year. The company’s same-store occupancy during the quarter was 95.3%. Moreover, it generated $248.6 million in revenues, up 24.8% from the prior-year quarter.
On July 26, CubeSmart (NYSE:CUBE) declared a quarterly dividend of $0.43 per share, in line with its previous dividend. In 2021, the company extended its dividend growth streak to 12 years, which makes it one of the best dividend stocks on our list. The stock’s dividend yield came in at 4.51%, as of October 11.
In August, Raymond James raised its price target on CubeSmart (NYSE:CUBE) to $58 with an Outperform rating on the shares. The firm appreciated the company’s better performance than its peers and attractive valuation.
At the end of Q2 2022, 18 hedge funds tracked by Insider Monkey reported owning stakes in CubeSmart (NYSE:CUBE), compared with 29 in the previous quarter. The collective value of these stakes is roughly $245 million. Among these hedge funds, Diamond Hill Capital was the company’s leading stakeholder in Q2.
4. VICI Properties Inc. (NYSE:VICI)
Dividend Yield as of October 11: 5.14%
VICI Properties Inc. (NYSE:VICI) specializes in casino properties across the US and also deals in gaming, hospitality, entertainment, and leisure destinations. JMP Properties initiated its coverage on the stock with an Outperform rating in August with a $38 price target. The firm highlighted the company’s enhanced investment activity and credit profile of its portfolio.
On September 8, VICI Properties Inc. (NYSE:VICI) announced an 8% hike in its quarterly dividend to $0.39 per share. This was the company’s fourth consecutive year of dividend growth. As of October 11, the stock’s dividend yield came in at 5.14%.
In Q2 2022, VICI Properties Inc. (NYSE:VICI) posted an operating income of $653 million, up from $200.4 million during the same period last year. At the end of June, the company had $614 million in cash and cash equivalents and $37.2 billion in total assets. Its revenue for the quarter came in at $662.6 million, presenting a 76% year-over-year growth.
At the end of Q2 2022, 26 hedge funds tracked by Insider Monkey owned stakes in VICI Properties Inc. (NYSE:VICI), compared with 36 in the previous quarter. The combined value of these stakes is nearly $288 million.
Meridian Funds mentioned VICI Properties Inc. (NYSE:VICI) in its Q2 2022 investor letter. Here is what the firm has to say:
“VICI Properties Inc. (NYSE:VICI) is a real estate investment trust company specializing in casinos and other entertainment properties. We invested in VICI in 2018 when earnings were declining due to dilutive acquisitions. Our thesis was that, as investors grew more comfortable with casinos as a REIT subsector, the value of their properties would increase. We also liked the defensive characteristics of the company, specifically the triple-net lease structure, which dictates that lessees pay all maintenance and capital expenditures, and the history of casino REITs with zero rent payments missed by casinos during either the global financial crisis or the 2020 pandemic. Furthermore, we were confident that VICI’s growth prospects would increase as more casinos monetized land holdings with VICI’s ability to use its extensive cash and liquidity to make acquisitions. VICI’s stock outperformed in the quarter due to its appeal as a fairly defensive investment and the news that it would be included in the S&P 500 Index. We maintained our position in VICI.”
3. Realty Income Corporation (NYSE:O)
Dividend Yield as of October 11: 5.19%
Realty Income Corporation (NYSE:O) is another best dividend stock in the REIT sector as the company pays monthly dividends to shareholders. The REIT has a 28-year track record of dividend growth and has paid 627 consecutive monthly dividends on its common stock throughout its 53-year operating history. It currently pays a monthly dividend of $0.248 per share, with a dividend yield of 5.19%, as of October 11.
In Q2 2022, Realty Income Corporation (NYSE:O) generated $743 million in free cash flow (FCF), up from $513.4 million in the previous quarter. The company’s FCF was enough to support its dividend payments during the quarter, worth $445.8 million. These dividend payments represented 76.5% of the company’s AFFO. Moreover, its revenue for the quarter came in at $810.4 million, up 75% from the same period last year.
In October, Raymond James maintained its Outperform rating on Realty Income Corporation (NYSE:O) with a $68 price target, as the firm sees the company as a strong risk/reward play within the net lease amid the uncertain market situation.
At the end of Q2 2022, 19 hedge funds tracked by Insider Monkey owned stakes in Realty Income Corporation (NYSE:O), down from 22 in the previous quarter. These stakes are collectively valued at over $200.7 million. Citadel Investment Group was the company’s leading stakeholder in Q2.
2. CareTrust REIT, Inc. (NYSE:CTRE)
Dividend Yield as of October 11: 6.64%
CareTrust REIT, Inc. (NYSE:CTRE) is a California-based real estate investment trust company that specializes in senior housing and healthcare facilities. In August, Barclays raised its price target on the stock to $20 with an Equal Weight rating on the shares, appreciating the company’s portfolio repositioning strategy.
CareTrust REIT, Inc. (NYSE:CTRE) has been raising its dividends consistently for the past seven years, with a five-year dividend CAGR of 9%. It currently pays a quarterly dividend of $0.275 per share for a dividend yield of 6.64%, as recorded on October 11.
Balyasny Asset Management owned over 1.2 million shares in CareTrust REIT, Inc. (NYSE:CTRE), valued at $23 million, becoming the company’s leading stakeholder in Q2. Overall, 15 hedge funds in Insider Monkey’s database owned stakes in the company in Q2, with a total value of over $53.8 million.
1. Medical Properties Trust, Inc. (NYSE:MPW)
Dividend Yield as of October 11: 11.16%
Medical Properties Trust, Inc. (NYSE:MPW) is an Alabama-based real estate investment trust company that mainly invests in healthcare facilities. It is one of the best dividend stocks on our list as it managed to raise its dividends consistently for the past nine years. Moreover, it has a dividend yield of 11.16%, up from a sector median of 4.3%. The company currently offers a quarterly dividend of $0.29 per share.
Following the company’s strong earnings in Q2 2022 and appreciating its stable balance sheet, Barclays maintained its Overweight rating on Medical Properties Trust, Inc. (NYSE:MPW) in August, with a $23 price target.
As of the close of Q2 2022, 15 hedge funds tracked by Insider Monkey owned stakes in Medical Properties Trust, Inc. (NYSE:MPW), compared with 16 a quarter earlier. These stakes hold a total value of over $238.5 million.
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Disclosure. None. 10 Best REIT Dividend Stocks is originally published on Insider Monkey.
