Top 3 Super-High Dividend REITs for Steady Cash Flows

Income investors looking for higher levels of income should consider high-dividend REITs. 

REITs typically own real estate properties that are leased out to tenants. This creates a steady stream of cash flow for REITs, a significant portion of which is paid to shareholders in the form of dividends.

The following three REITs have strong business models, and currently have dividend yields above 5%.

1. EPR Properties (EPR)

EPR Properties EPR is a specialty real estate investment trust, or REIT, that invests in properties in specific market segments that require industry knowledge to operate effectively. It selects properties it believes have strong return potential in entertainment, recreation and education. The REIT structures its investments as triple net, a structure that places the operating costs of the property on the tenants, not the REIT.

The portfolio includes about $7 billion in investments across 300-plus locations in 44 states, including over 250 tenants. Total revenue should be in excess of $630 million this year, and the stock is valued at $3.4 billion.

EPR posted third quarter earnings on October 30, 2024, and results were better than expected on both the top and bottom lines. Funds from operations (FFO) came to $1.29, which was two cents ahead of estimates. FFO was down from $1.47 per share a year ago.

The company is also expecting investment spending in the range of $225 million to $275 million, which was $200 million to $300 million prior. Disposition proceeds are expected to be $70 million to $100 million, up from $60 million to $75 million.

Recent results seem to indicate that the worst is behind EPR, and the Regal restructuring is a big step forward. We’re moving our growth estimate to 2% as we think EPR’s current level of earnings is sustainable, but tough to grow meaningfully from for the time being.

EPR’s competitive advantage is its portfolio of specialized properties. EPR has methodically identified the most profitable properties through years of experience and focuses its investments in these areas.

EPR shares currently yield 7.3%.

2. Gladstone Commercial (GOOD)

Gladstone Commercial Corporation GOOD is a real estate investment trust, or REIT, that specializes in single-tenant and anchored multi-tenant net leased industrial and office properties across the U.S. The trust targets primary and secondary markets that possess favorable economic growth trends, growing populations, strong employment and robust growth trends.

The trust’s stated goal is to pay shareholders monthly distributions, which it has done for more than 17 consecutive years. Gladstone owns over 100 properties in 24 states that are leased to about 100 unique tenants and has a market capitalization of $756 million.

Gladstone posted third quarter earnings on November 4, 2024, and results were better than expected on both the top and bottom lines. FFO came to 38 cents, which was three cents ahead of estimates. Revenue was up 7.6% year over year to $39.24 million, which was $2.38 million ahead of expectations.

Same-store rents continue to rise, and the trust is continuing to focus on building its industrial property portfolio rather than offices. Concentrations in those two areas are now 63% and 33%, respectively. Occupancy ended the quarter at 98.5%, which was unchanged from Q2. Gladstone also noted it collected 100% of its cash rents that were due during the quarter.

Gladstone purchased one fully-occupied property that is 50,000 square feet for $10.2 million, at a cap rate of 9.94%. It also sold two non-core properties for an aggregate of $14.2 million. The trust issued 2.7 million common shares for a total of $38.9 million. We’ve boosted our estimate of outstanding shares commensurately. In addition, it issued 4,400 preferred shares for about $100,000.

In the case of recession, Gladstone should fare quite well as it has long lease terms, so the impact on the trust’s earnings should be minimal, which is consistent with how Gladstone performed during the Great Recession. Last year’s challenges have shown that Gladstone can weather a tough environment.

GOOD stock currently yields 7.4%.

3. Omega Healthcare Investors (OHI)

Omega Healthcare Investors OHI is a healthcare REIT that generates over 80% of its revenues from skilled nursing facilities, and the remainder of its revenues from senior housing developments. Omega has a market capitalization of $11.5 billion and was founded in 1992. The trust generates about $830 million of annual revenue.

Omega posted third quarter earnings on October 30, 2024, and results were better than expected on both the top and bottom lines. FFO came to 74 cents, which was three cents ahead of estimates. Revenue was up 14% year over year to $276 million, which was $60 million better than expected. FFO on a dollar basis was $196 million, up from $161 million a year ago. Funds available for distribution came to $192 million, up from $174 million a year ago.

Future growth will come from new property investments. Omega completed $440 million in new investments during the last quarter, including $390 million in real estate acquisitions, including the assumption of $243 million in mortgage loans, and $50 million in real estate loans. So far in Q4, it has also completed an additional $119 million in new investments.

Omega benefits from some favorable trends. The number of elderly people in need of healthcare is expected to grow at a fast pace over the next decade. In addition, the trend is for increasing healthcare spending in the U.S. Omega will see only a small portion of its leases expire over the next decade.

The healthcare sector is much less cyclical during recessions than other sectors of the economy. During the Great Recession, Omega saw its FFO-per-share decrease by only 3%. It also had a strong dividend growth record, prior to 2020. The payout ratio is quite high, but that is typical for a REIT, and the dividend appears secure, provided the company’s FFO continues to grow.

OHI currently yields 7.2%.

At the time of publication, Ciura had no positions in any securities mentioned.