What Real Estate Downturn? Nearly Half Of America's REITs Increased Their Dividends In 2024

It's no secret that market-related turbulence has roiled multiple REIT sectors for the past several years. The commercial sector's troubles continue to cause alarm, and the entire REIT sector clamored for interest rate cuts all last year. Despite smaller than desired rate cuts, a recent report from S&P Global Market Intelligence indicated that almost half of the REITs in America increased dividends in 2024. Benzinga looks at which sectors had the biggest increases.

The overall picture will certainly come as good news for REIT investors, but it also speaks to the sector's resilience. Historically, real estate ownership has been one of the most reliable methods of generating passive income, which explains why REITs are so popular with investors. With that said, there were some surprises in the S&P report.

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You may have assumed that America's housing affordability crisis drove higher dividends in the residential sector. However, the retail REIT sector was the biggest winner in 2024. According to S&P's research, almost 80% (21 out of 27) of REITs in the sector delivered increased shareholder dividends last year. The next biggest winner was the industrial sector, where 77% of REITs paid shareholders a higher dividend in 2024 than the previous year.

There was also considerable upward movement in the hotel sector, which included some of the biggest dividend increases by individual REITs. Park Hotels & Resorts PK increased its quarterly dividend by a whopping 67% and had the biggest jump of any REIT. Shareholders in the REIT saw their quarterly dividend go from $0.15 to $0.25.

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RLJ Lodging Trust RLJ also had a strong showing, thanks to a 50% dividend increase that brought shareholder payouts to roughly $0.15 per share. Other hotel REITs that increased their dividends include Summit Hotel Properties INN  and Xenia Hotels & Resorts XHR, which upped their dividends to 4.8% and 4%, respectively. Although it's not the largest sector, it's safe to assume that shareholders in any of these REITs are hoping for more of the same in 2025.

On the residential front, Veris Residential VRE posted the third-largest increase of any REIT in the S&P report, a 65% increase that saw shareholders’ quarterly payout go from $0.525 to $0.80 per share. American Homes 4 Rent AHM is another residential REIT with a big breakout in 2024. This REIT increased its dividend by 18.2%, translating to $1.04 per share.

Overall, the 2024 results speak to the quality of the assets and management in REITs. However, there were some surprises. Considering AI's nearly insatiable demand for data, it's surprising that the Data Center REIT sector was not one of 2024's biggest movers. With that said, almost half of America's 76 REITs made more money for their shareholders than they did in 2023. That means this sector is still a winner for passive income investors.

Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

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