September can be challenging for investors, as evidenced by the harsh 626-point drop in the Dow and losses of 2.12% and 3.26% to the S&P 500 and Nasdaq Composite, respectively, on the first trading day after the Labor Day holiday.
Owning dividend stocks in a portfolio can help offset losses during periods of heavy volatility. During those times, real estate investment trusts (REITs) benefit investors since they must pay out 90% of their taxable income to shareholders in dividends. However, when selecting REITs to buy, investors cannot just chase high-yielding dividends without considering the overall recent performance, safety, and reliability of the dividend and the company.
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Look at three REITs with high-yielding dividends that posted solid double-digit gains in August and should continue to perform well over the month ahead. With market volatility picking up, investors can take advantage of increasing yields for the long term:
OutFront Media
OutFront Media Inc. OUT is a New York-based specialized REIT with 500,000 advertising displays across the 50 largest U.S. markets. It utilizes billboard, digital, transit and mobile assets to showcase its clients with 14.1 billion weekly impressions. OutFront is one of only two specialized REITs that own advertising displays. OutFront Media's website claims that its media reaches 70% of all Americans every week.
In recent news, on Aug. 6, OutFront Media released its second-quarter operating results. Adjusted EPS of $0.18 missed the estimate of $0.21 per share and revenue of $477.3 million missed the estimate of $483.6 million. However, revenue improved from $468.8 million in the same quarter last year.
On Aug. 13, Barrington Research analyst James Goss maintained OutFront Media with an Outperform rating and raised the price target from $17 to $18.
On Sept. 3, OutFront Media announced that Chairman/CEO Jeremy Male will present at Citi's 2024 Global TMT Conference.
From Aug. 4 through Sept. 3, OutFront Media was one of the best-performing REITs, with a total return of 19.48%. In addition, the $0.30 quarterly dividend yields 7.22% annually and with a forward payout ratio of 69.36%, the dividend is well covered by earnings.
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MFA Financial
MFA Financial Inc MFA is a New York-based mortgage REIT (mREIT) that invests in residential mortgage-backed securities (MBS) and whole loans for residential properties. MFA had its IPO In April 1998.
On Aug. 8, MFA Financial announced its Q2 operating results. Adjusted EPS of $0.44 per share beat the consensus estimate of $0.38 and topped its earnings of $0.40 in Q2 2023. Revenue of $53.49 million beat the street's forecast of $53.16 million and was 20.19% above revenue of $44.51 million in Q2 2023.
On Aug. 9, Wedbush analyst Jay McCanless maintained MFA Financial at Outperform and raised the price target from $13 to $14. The same day, Keefe, Bruyette & Woods analyst Bose George maintained Mfa Financial at Outperform and raised the price target from $12 to $13.
On Aug. 21, MFA Financial announced that its Co-Chief Investment Officer, Bryan Wulfsohn, will assume an additional company role as President beginning September 3. He will replace Craig L. Knutson, the previous CEO and President of Mfa Financial, who will remain in his role as CEO.
From Aug. 4 through Sept. 3, Mfa Financial had a total return of 17.99% and the stock recently made several new 52-week highs.
The $0.35 per share quarterly dividend yields 11.35% annually. Unlike several other mREITs, MFA Financial is paying out less in dividends than it's taking in. The forward payout ratio is a bit high at 83.33%, but with improving earnings, the payout ratio should continue to decline.
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Clipper Realty
Clipper Realty Inc. CLPR is a small, self-administered, self-managed REIT based in New York City. It was formed in 2017 and owns, manages, and operates 11 multifamily residential and commercial properties.
On Aug. 1, Clipper Realty announced its Q2 operating results. FFO of $0.17 per share beat the consensus estimate of $0.12 by 41.67% and was a 30.77% increase over FFO of $0.13 per share from Q2 2023. Revenue of $37.346 million topped the forecast of $36.008 million and increased from $34.543 million in the same quarter last year.
Clipper Realty pays a quarterly dividend of $0.095 per share, yielding 7.86% annually. The payout ratio of 67.86% is more than adequate to cover the dividend.
While Clipper Realty lost 29.10% in a dismal first half of 2024, it bounced back very strongly over the past two months. From Aug. 4 through Sept. 3, Clipper Realty had a total return of 15.34%. With a strong Q2 behind it, Clipper Realty should continue performing well.
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