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Investors looking for high-yield dividend stocks often worry about sacrificing price appreciation for yield or, worse, falling into yield traps—that is, stocks that are at risk of having their dividends cut.
One way to reduce the risk of underperformance or dividend cuts is to look at recent performance versus peers. Strong relative strength often indicates that the risks of entering a yield trap or a share price decline are low.
Check out three real estate investment trusts (REITs) with dividend yields above 8% that have outperformed other high-yield REITs over the past month.
Global Medical REIT Inc. (NYSE:GMRE) is a net-lease healthcare REIT based in Bethesda, Maryland that owns and operates 185 properties with 268 tenants and over $4.7 million of net rentable square feet of specialty facilities that it leases to health systems and physician groups throughout the U.S. The most recent occupancy rate was 96.4% and the weighted average lease term (WALT) is 5.6 years.
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On May 7, Global Medical reported first-quarter earnings results. FFO of $0.23 per share beat the consensus estimate of $0.21 and was in line with first-quarter 2023 results. Revenue of $35.069 million beat the $33.938 million estimate but fell short of first-quarter 2023 revenue of $36.199 million.
On May 13, Bryan Maher, an analyst at B. Riley Securities, maintained a Buy rating on Global Medical and lowered the price target from $11 to $10.
Over the past month, Global Medical REIT was the best performing REIT with a dividend yield of 8.00% or higher, with a total gain of 6.81%.
Omega Healthcare Investors Inc. (NYSE:OHI) is a triple-net equity health care Real Estate Investment Trust (REIT) based in Hunt Valley, MD, that provides financing, capital and triple-net leasing to 73 different operators in 866 senior living, nursing home and assisted living facilities in 42 U.S. states and the United Kingdom.
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Omega Healthcare Investors has no role in the day-to-day management of these facilities, which are managed by the operators. Omega has $9.9 billion in real estate investments. Texas and Indiana are the two states with the largest number of Omega facilities.
On May 2, Omega Healthcare Investors reported operating results for the first quarter of 2024. AFFO of $0.68 per share beat analysts’ consensus estimate of $0.66 and exceeded AFFO of $0.66 per share from the first quarter of 2023. Revenue of $243.299 million topped analyst consensus estimates of $231.639 million and was up 11.50% from Q1 2023 revenue of $218.202 million. Omega Healthcare also reaffirmed its full-year 2024 AFFO guidance of $2 .70-$2.80.
On May 6, JMP Securities analyst Aaron Hecht reiterated the Market Perform rating for Omega Healthcare.
On June 3, Omega Healthcare announced that it would commit $10 million to Lavie Care Centers, one of Omega’s operators, to fund 50 percent of its debtor-in-possession (DIP) financing during the bankruptcy. One of the DIP financing provisions is that Lavie must pay Omega $3 million in monthly rent for the 30 properties it operates. The agreement is subject to bankruptcy court approval.
While there are risks involved, this DIP financing could increase Omega Healthcare’s FFO in the coming years and the street responded positively. Omega Healthcare Investors was the second best performing REIT with a dividend yield of 8% or better over the past month with a total gain of 4.41%
Eastern Government Properties Inc. Easterly Government Properties, Inc. (NYSE:DEA) is an office REIT that acquires, develops and manages Class A commercial properties and leases them exclusively to government agencies through the General Services Administration. Easterly Government Properties owns a total of 93 properties with 9.1 million leased square feet in 26 states.
Easterly has made some internal changes this year. Co-founder and former Chairman of the Board Darrel W. Crate became the new CEO on January 1, 2024, replacing retiring CEO William C. Trimble, III. Mr Trimble died in February.
There has been a lot of buzz in the news from Easterly since the beginning of the year, with occupancy now at 100% with a weighted average lease term (WALT) of 10.3 years.
On June 4, Easterly announced it had secured a new $400 million revolving credit facility with an option for up to $250 in additional funds. The facility matures in four years and has two six-month extension options. It will bear interest at the Secured Overnight Funding Rate (SOFR) plus 1.20% to 1.80%.
Easterly Government Properties has delivered a total return of 4.13% over the past four weeks, making it the third-best performing REIT with a dividend yield of 8% or better. Since its IPO in February 2015, Easterly has a solid history of dividend increases.
Note: 21 REITs with dividend yields of 8% or higher were considered in this article. Mortgage REITs (mREITs), which have very high dividend yields but are quite volatile and often cut dividends when yields rise, were intentionally excluded. Yields are from the close on May 23 to the close on June 21.
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This article 3 Strong Performing REITs With Dividend Yields Over 8% originally appeared on Benzinga.com
