The 3 Strongest REITs With Dividend Yields Above 6%

Lately, it’s been difficult to remain fully invested in real estate investment trusts (REITs) when so many high-yielding REITs have had their share prices decimated over the past two months or longer.

Among the 104 REITs whose dividend yields are 6% or higher, only one — Broadmark Realty Capital Inc. BRMK — has had a positive return over the past four weeks, and that’s because it was acquired by Ready Capital Corp. RC. Of the 104 REITs with 6% or higher dividends, 30 have lost between 20% and 40% within the past month.

Looking at the past 13 weeks, only 10 of the 104 (9.6%) have had a positive return, not including dividends.

With such dismal numbers, it’s difficult to find REITs that have held up better than their peer groups. But take a look at three REITs from different subsectors whose recent small losses were still far superior to the majority of REITs.  In addition, all three have dividend yields above 6.5%:

 Postal Realty Trust Inc. PSTL is an office REIT that specializes in owning and leasing properties to the U.S. Postal Service. Postal Realty owns 1,307 post offices in 49 states. Its weighted average lease retention rate is over 99% with weighted average remaining lease terms of approximately three years.

Over the past four weeks, Postal Realty Trust lost 1.23%, and over the past 13 weeks, it’s down 2.5%. Not bad, considering how most other REITs have performed over this time frame.

On March 1, Postal Realty announced its fourth-quarter results. Funds from operations (FFO) of $0.28 was a 12% increase over FFO of $0.25 in the fourth quarter of 2021. Revenue of $14.9 million was ahead of consensus estimates of $14.25 million and 33.84% above revenue of $11.13 million in the fourth quarter of 2021.

Postal Realty pays a quarterly dividend of $0.2375 per share, and the annual dividend yield is 6.59%. While it has grown its quarterly dividend 277% since 2019, the payout ratio on FFO is now about 100%. That puts further dividend increases in doubt unless it can continue to grow the FFO.

One Liberty Properties Inc. OLP is a Great Neck, New York-based diversified REIT that owns and manages retail, office and industrial properties under long-term triple-net leases. One Liberty Properties owns 121 properties totaling more than 11.3 million square feet in 31 states. Most of its properties are located in the Eastern and Midwestern U.S.

Over the past four weeks, One Liberty Properties has declined 2.54%, and over the past 13 weeks, it’s down just 0.98%. During the week of March 13 to March 17, it rose over 7.5%, as fourth-quarter FFO of $0.52 per share beat the analysts’ estimate of $0.34 by 52.94% and was 1.96% better than FFO of $0.51 per share in the fourth quarter of 2021. Revenue of $27.71 million was ahead of the consensus for $21.2 million by 30.73% and a 32.98% increase over revenue of $20.84 million in the fourth quarter of 2021.

One Liberty Properties pays a quarterly dividend of $0.45 per share, and the annual dividend yield is 8.08%. The payout ratio is 92.3%, so further dividend increases are not likely unless it continues to raise its earnings.

Healthcare Realty Trust Inc. HR is a Nashville, Tennessee-based healthcare REIT that owns and develops outpatient medical facilities across the U.S. It was formed by a merger between Healthcare Realty and Healthcare Trust of America in July 2022. The merger created a company that now has 721 properties totaling 42 million square feet in 35 states. Eighty-five percent of Healthcare Realty’s properties are in larger cities such as Atlanta, Boston, Dallas, Houston and Los Angeles.

On March 1, Healthcare Realty reported fourth-quarter operating results. FFO of $0.42 was 2 cents better than the analysts’ projections but 2 cents below FFO of $0.44 in the fourth quarter of 2021. Revenue of $338.06 million missed consensus estimates by $5.94 million but was 147.8% above $136.4 million in the fourth quarter of 2021.

Over the past month, Healthcare Realty Trust has dropped 3.61%, but over the past 13 weeks, it’s up 0.85%.

Healthcare Realty pays a quarterly dividend of $0.31 per share and the annual dividend of $1.38 yields 6.54%. Its forward FFO of $1.65 per share has a payout ratio of 83.6%. When the REIT market turns around, all three of these stocks could continue to be market leaders.

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