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Investors looking to increase their investment income may find real estate investment trusts (REITs) attractive.
REITs own or finance income-producing real estate, such as office buildings, apartments or shopping centers. By collecting rental income or interest on loans, REITs can provide shareholders with consistent dividend payments.
REITs offer an attractive tax benefit for income investors. To maintain their special tax status, REITs must distribute at least 90% of their taxable income to shareholders annually. This requirement allows REITs to avoid paying corporate taxes.
High yield REITs can be attractive, but they are not always a sure thing. Investors should analyze a company’s fundamentals to ensure its high dividend is sustainable. In addition to returns, factors such as valuation, management team, balance sheet strength and growth prospects are equally important.
Check out these 10 high-yield REITs, selected by Sure Dividend, to see if they fit your portfolio:
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Orchid Island Capital Inc. (NYSE:ORC) is a mortgage REIT specializing in residential mortgage-backed securities. These securities are backed by various home loans and generate income for the company.
In the second quarter of 2024, Orchid Island reported a net loss of $5 million or $0.09 per share, which was lower than analyst estimates. Although the company’s revenue declined significantly year over year, it exceeded expectations.
Despite the net loss, Orchid Island continued to pay dividends to shareholders, paying $0.36 per share during the quarter. As of June 30, the company’s book value per share was $8.58.
Two Havens Investment Corp. (NYSE:TWO) is a REIT that specializes in residential mortgages. The company invests primarily in residential mortgage-backed securities, mortgage loans, mortgage servicing rights and commercial real estate.
Two Harbors generates the majority of its revenue from interest income on available-for-sale securities.
Two Harbors reported second-quarter earnings per share of $0.17, missing analysts’ estimates by $0.27. Revenue for the quarter was negative $38.25 million, down 8.48% year over year.
Despite challenging market conditions, Two Harbors maintained a stable book value of $15.19 per share and declared a second quarter dividend of $0.45 per share. Over the first half of 2024, the company generated a total economic return on book value of 5.8%.
Two Harbors reported total income of $500,000 and repurchased $10 million of convertible senior notes.
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Armor Residential REIT (NYSE:ARR) invests primarily in residential mortgage-backed securities issued by government-sponsored entities such as Fannie Mae, Freddie Mac and Ginnie Mae. The securities are backed by several types of home loans, including fixed-rate mortgages, adjustable-rate hybrid mortgages and adjustable-rate mortgages. Armor may also invest in unsecured notes, bonds, money market instruments and other non-government backed securities.
Armor reported a GAAP net loss of $51.3 million in the second quarter, or $1.05 per share. However, the company generated net interest income of $7 million and distributable earnings of $52.5 million, or $1.08 per share.
During the quarter, Armor paid a monthly dividend of $0.24 per share, for a total of $0.72. The company’s average interest income on assets was 5%, while interest expense on liabilities was 5.52%. This resulted in an economic interest result of 4.74% and a net interest surcharge of 2.05%.
Dynex Capital Inc. (NYSE:DX) invests primarily in leveraged mortgage-backed securities. The company focuses on both agency and non-agency mortgage-backed securities.
On July 22, Dynex reported an extended loss of $0.31 per common share, representing a 2.4% decline in book value. On June 20, the book value per common share was $12.50.
The company also reported a comprehensive loss of $0.18 per share and a net loss of $0.15 per share. Despite the losses, Dynex announced a dividend of $0.39 per common share for the second quarter.
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Ellington Credit Co. (NYSE:EARN) is a financial company that invests in residential mortgages and real estate. The company invests primarily in mortgage-backed securities backed by the U.S. government or government-sponsored enterprises.
On August 12, Ellington Residential reported a net loss of $800,000 or $0.04 per share. However, adjusted distributable earnings were $7.3 million or $0.36 per share, enough to cover the dividend paid during the quarter.
Ellington’s net interest margin was 4.24%. At the end of the quarter, the company held $118.8 million in cash and cash equivalents, along with $44 million in other unencumbered assets.
AGNC Investment Corp. (NASDAQ:AGNC) is a mortgage REIT that invests primarily in agency mortgage-backed securities using leverage. The company’s investment portfolio includes residential mortgage pass-through securities, collateralized mortgage bonds and non-agency mortgage-backed securities, many of which are backed by government-sponsored enterprises.
On July 22, AGNC reported a comprehensive loss of $0.13 per common share, including a net loss of $0.11 per share and an additional $0.02 per share in other comprehensive losses.
The company’s net spread and dollar roll income per common share was $0.53, excluding a benefit of $0.02 per share resulting from a catch-up premium amortization adjustment. As of June 30, AGNC’s tangible net book value per common share was $8.40, down 5% from the prior quarter.
Ares Commercial Real Estate (NYSE:ACRE) specializes in commercial real estate lending. Last year, the company generated approximately $198.6 million in interest income.
On August 6, Ares Commercial reported a decline in second-quarter profit. Interest income fell 21% to $40.98 million due to challenges in the commercial real estate market, including rising inflation and the impact of remote work trends.
Despite a 2% increase in interest expense to $27.5 million, total revenues fell 33% to approximately $16.8 million.
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New York Mortgage Trust Inc. (NASDAQ:NYMT) invests in real estate-related assets such as residential mortgages, preferred shares and joint venture shares. It possesses no physical properties.
On July 31, the company reported adjusted earnings per share at a loss of $0.25, significantly exceeding analyst expectations. Total net interest income increased 26% year-over-year to $19.04 million, but was more than $4 million below expectations.
Sachem Capital Corp. (NYSEAMERICAN: SACH) is a Connecticut-based real estate finance company specializing in short-term loans secured by real estate in Connecticut. The loans, which typically last three years or less, are personally guaranteed by the borrowers and are often backed by additional collateral.
Sachem generates annual sales of approximately $65 million. On August 14, the company reported second-quarter total revenue of $15.2 million, down 7% compared to the same period in 2023.
The decline in interest income was attributed to a decrease in the number of loans granted, modifications and extensions. As a result, commission income, mainly from origination fees, declined 37.2% year over year.
Global Net Lease Inc. (NYSE:GNL) invests in commercial real estate in the US and Europe, primarily through sale-leaseback transactions. The company owns more than 1,300 properties totaling nearly 67 million square feet, valued at $9.2 billion.
On August 6, Global Net Lease reported a net loss per share of $0.20 for the second quarter, exceeding analyst expectations. Revenue for the quarter was $203.29 million, up 112% year over year, but still fell short of estimates.
The company increased its adjusted operating resources per share by 2% to $0.33 and reduced its outstanding debt by $251 million.
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Arrivald allows individuals to invest in rental property shares for as little as $100, providing the opportunity for monthly rental income and long-term appreciation without the hassle of a landlord. With more than $1 million in dividends paid last quarter and a growing portfolio of properties across markets, Arrivald offers an attractive alternative for investors looking to build a diversified real estate portfolio.
In October 2024, Arrivald sold The Centennial and achieved a total return of 34.7% (11.2% average annual return) for investors. Arrivald’s goal is to continue to deliver comparable value across our portfolio through careful market selection, attentive property management and thoughtful timing of sales.
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This article 10 REITs to Boost Your Portfolio with Up to 18.6% Returns originally appeared on Benzinga.com
