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Are you utilizing your capital to create passive income? Real estate investment trusts (REITs) can serve as consistent income-producing stock picks for investors by paying out 90% or more of profits to shareholders.
High-dividend REITs are lucrative and generally safe additions to an investment portfolio.
When you’re determining the right REIT for your investment goals, it’s important to consider factors like the trust’s valuation, balance sheet strength and asset quality.
Top 10 Best High-Yield REIT Stocks
- Annaly Capital Management
- Apollo Commercial Real Estate Finance
- Simon Property Group
- Realty Income
- ARMOUR Residential REIT
- Iron Mountain
- Omega Healthcare
- Chimera Investment Corporation
- AGNC Investment Corp
- Two Harbors Investment Corp
We’ve researched these aspects and more, including stock prices, growth potential, property outlooks, payout ratios, and leadership and sponsors of a host of real estate investment trusts.
Here is a comprehensive breakdown of the 10 best REIT stocks to invest in in 2023.
Annaly Capital Management (NLY)
Annaly Capital Management (ACM), trading as NLY on the New York Stock Exchange (NYSE), is a hybrid REIT that offers investment diversification through a combination of mortgage-backed securities and services and residential real estate.
It exercises disciplined corporate responsibility and values, providing direct aid to developing communities.
Types of investments – ACM invests in affordable housing and mortgage loans, but also maintains some commercial real estate in sectors like education, healthcare and affordable grocery stores.
It also participates in joint ventures with partnering firms such as Capital Impact to finance community development projects.
Some of these partnership investments include eldercare housing, health food production facilities, community centers and charter schools across the country.
ACM prioritizes investing in low-income areas to help individuals near or below the poverty line.
Another partnership is with Washington, D.C. Affordable Housing Preservation Fund. Annaly Capital Management finances residential mortgages in line with this development program.
- Markets – ACM operates within the United States market.
- Dividend yield – This REIT’s dividend yield is 8.5 percent.
- Why we recommend it – Annaly Capital Management has an investment portfolio diversity that retains low volatility and offers consistently high dividend payments.
It has an unparalleled commitment to community development, a reliable track record and undeniable team experience.
Apollo Commercial Real Estate Finance (ARI)
Apollo usually invests in mortgages and various other commercial collateral in both Europe and the United States. The company prides itself on its ability to understand the market and quickly underwrite its investments.
Its management team consists of men and women who have a deep understanding of the real estate market.
Types of investments – As mentioned above, Apollo invests in real estate loans. It also invests in preferred equity, senior loans, bridge loans and subordinate debt.
- Markets – Apollo invests in the United States and European markets.
- Dividend yield – Apollo’s dividend yield is 12 percent.
- Why we recommend it – Given its high yield, your dividend payments will be higher should you choose to invest with Apollo.
Since they work in Europe and the United States, Apollo has a unique view of both markets, which results in higher returns.
The numerous types of investments Apollo provide make it easy to get started.
Simon Property Group (SPG)
Simon Property Group (SPG) is a commercial real estate hybrid REIT with a healthy mix of equity and mortgage-backed securities.
The company allocates funds to sustainability initiatives and places a strong emphasis on forward-thinking practices.
Types of investments – SPG’s portfolio is dominantly retail spaces, like large shopping centers and designer outlets, and the company is behind iconic global destinations like The Shop at Crystals in Las Vegas.
It also manages single-tenant commercial spaces, office properties, self-storage facilities, hotels, luxury spaces and lifestyle centers.
This real estate company also finances commercial leasing and brand investment to generate investor dividends through in-person and digital sales.
- Markets – SPG invests in North American, European and Asian markets.
- Dividend yield – SPG’s dividend yield is 6.32 percent.
- Why we recommend it – This commercial real estate company invests widely in global markets and possesses some of the most high-traffic and profitable equity securities in the world.
The high-yield dividends are consistent, and its innovation strategies in digital marketing and sales bode well for future investments.
Realty Income (O)
Trading as (O) on the NYSE, Realty Income takes a conservative capital approach to investment that prioritizes dependable cash flow from monthly dividends for its investors.
The company operates in the net lease REIT sector and has a strong ESG focus.
Types of investments – Realty Income acquires single-unit commercial properties with long-term net lease contracts already in place with investment-grade businesses.
Clients include industry leaders like Walgreens, FedEx, Dollar General and LA Fitness. Realty Income works within retail and non-retail industries and provides capital for new developments and expansions among clients with lease agreements in place.
- Markets – This REIT’s markets are in the United States, the United Kingdom and Spain.
- Dividend yield – Realty Income’s dividend yield is 4.85 percent.
- Why we recommend it – This company’s business ethics practices, commitment to secure and low-risk investments that ensure monthly dividend payouts and reassuring record of high occupancy make Realty Income a safe bet.
ARMOUR Residential REIT (ARR)
It works with U.S. government-sponsored groups, with values centered on responsible and well-researched investments and providing mortgages to a diverse range of Americans.
Types of investments – ARR specializes in U.S. government-backed securities like Freddy Mac and Fannie Mae residential mortgages.
This real estate finance company also invests in money market instruments, interest-only securities, and U.S. Treasury securities.
- Markets – ARR invests in the United States residential real estate market.
- Dividend Yield – The dividend yield for ARR is 22.94 percent.
- Why we recommend it – Working with U.S. government-sponsored entities reflects a risk-adjusted approach to investing. The dividend yield is higher than any other REITs on this list.
Iron Mountain (IRM)
Iron Mountain (IRM) works in information management services, storage solutions and asset life cycle innovations. Environmental awareness is at the core of its business strategies and practices.
Types of investments – IRM’s main investments relate to secure records and art storage and data centers, although it also offers mortgage and loan solutions.
- Markets – IRM operates in the United States market.
- Dividend yield – IRM’s dividend yield is 4.96 percent.
- Why we recommend it – IRM’s storage, asset and data services emphasize solving pandemic-specific challenges, giving it relevance.
Omega Healthcare Investors (OHI)
Omega Health Investors (OHI) is an equity REIT that provides financing and capital for eldercare facilities. It focuses on triple-net, long-term leases and often reinvests in its operators to ensure long-term financial success.
Types of investments – OHI acquires commercial real estate, enters into lease agreements with new senior care operators and participates in sales leaseback programs, in addition to reinvesting into expansion or renovation projects with its operators.
- Markets – OHI invests in the United States and the United Kingdom.
- Dividend yields – The OHI dividend yield is 8.41 percent.
- Why we recommend it – The unique reinvestment strategy OHI employs structures long-term dividend payouts.
Chimera Investment Corporation (CIM)
Chimera began in New York in 2007 as a mortgage REIT. It also acquires and liquidates senior bonds, depending on stock market conditions.
Types of investments – Chimera invests in agency commercial mortgage-backed securities (CMBS), agency residential mortgage-backed securities (RMBS), non-agency RMBS and residential mortgage loans.
It holds onto subordinate and third-party RMBS that generate income from interest, thus mitigating risk.
- Markets – Chimera works within the United States residential property market.
- Dividend yields – Chimera’s dividend yield is 18.86 percent.
- Why we recommend it – Chimera offers high-yielding, risk-adjusted returns based on its strategic handling of mortgage securities.
AGNC Investment Corp (AGNC)
AGNC is a mortgage REIT primarily investing in agency mortgage-backed securities (MBS). It prioritizes discipline in its risk management approach and has impressive scale and liquidity.
Types of investments – AGNC invests in agency MBS, non-agency MBS and commercial MBS. It primarily funds investments through repurchase agreements.
Currently, the real estate company holds $61.5 billion in securities.
- Markets – AGNC operates within the United States market.
- Dividend yields – AGNC has a dividend yield of 18.25 percent.
- Why we recommend it – AGNC practices impressive risk management. It works in primarily fixed-interest rate mortgages to provide high-yield dividends to stockholders and is an excellent long-term investment solution.
Two Harbors Investment Corp (TWO)
Two Harbors Investment Corp (TWO) is another mortgage REIT that manages and funds financial assets, agency RMBS and non-agency RMBS. It is dedicated to corporate responsibility and stakeholder engagement.
Types of investments – TWO focuses on agency RMBS, mortgage servicing rights and additional financial assets.
- Markets – The company operates in the United States residential real estate market.
- Dividend yields – TWO offers a dividend yield of 19.32 percent.
- Why we recommend it – TWO exercises social and environmental corporate responsibility and provides high-yield passive income in dividends for stockholders.
5 Dividend REIT Honorable Mentions
If you choose to look beyond the best dividend REITs mentioned above, here are five more you may be interested in:
- Alexander’s Inc. (ALX), with a 7.82 percent dividend yield, develops, manages and leases properties in the New York area.
- Medical Properties Trust (MPW), with a 9.85 percent dividend yield, owns hospitals in Europe, the United States, South America and Australia, including behavioral health, inpatient rehab and acute care facilities.
- New York Mortgage Trust (NYMT), with a 15.04 percent dividend yield, finances multifamily and single-family residential mortgages and specializes in bulk and flow purchases for growth opportunities.
- Gladstone Commercial Corp (GOOD), with an 8.61 percent dividend yield, invests in net lease single and multi-tenant commercial and office properties across the United States.
- Office Properties Income Trust (OPI), with a 14.64 percent dividend yield, invests in long-term net lease properties with investment-grade clients with strict qualifying factors to mitigate risk.
How to Buy High Dividend REITs
- Research and understand the structure and different types of REITs.
- Learn the risks, tax ramifications and proper evaluation metrics associated with REITs.
- Find a broker that meets your pricing needs, and open a brokerage account to purchase one or more REIT stocks.
- Compare REITs, and meet with a financial advisor to determine the right investment for you.
Investing in mortgage and equity REITs is a wise and valuable way to create passive income. Many REITs are offering risk-adjusted returns in the form of monthly dividend payouts.
The 10 best high-dividend REIT stocks that pay monthly in 2023 are a mix of hybrid, equity and mortgage REITs that invest in domestic and international markets with the acquisition and financing of commercial and residential properties.
Compare the business ethics, investment strategies and dividend yields of available REITs to find the right real estate company for your investment.
Dividend REIT FAQs
Below are the most frequently asked questions about REITs.
What is a REIT?
REIT stands for real estate investment trust, which is a company that owns residential or commercial properties and mortgage-backed securities funded by shareholders.
Why do REITs pay a high dividend?
To qualify as a REIT, a company has to pay out 90 percent or more of its taxable income in dividends to investors.
What is the average dividend for REITs?
The average dividend yield for a REIT is around three percent.
Are high-dividend REITs safe?
Generally, REITs are safe investments because they are backed by steady rental income.