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Investors looking for high dividend stocks often worry about sacrificing price appreciation for yield or, worse, falling into “yield traps” – stocks that are at risk of having their dividend cut.
One way to reduce the risk of poor performance or dividend cuts is to compare recent performance to peers. Strong relative strength often indicates that the risks of falling into a yield trap or a falling stock price are low.
Take a look at three real estate investment trusts (REITs) with dividend yields above 8% that have outperformed other high-yielding REITs over the past month.
REIT Medical Mondial Inc. (NYSE:GMRE) is a Bethesda, Maryland-based net lease healthcare REIT that owns and operates 185 properties with 268 tenants and more than 4.7 million net leasable square feet of specialty facilities that it leases to systems healthcare and physician groups across the United States. Its 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 released its first quarter operating results. FFO of $0.23 per share beat the consensus estimate of $0.21 and was in line with Q1 2023 results. Revenue of $35.069 million beat the estimate of $33.938 million , but is lower than the first quarter 2023 revenue of $36.199 million.
On May 13, B. Riley Securities analyst Bryan Maher maintained his Buy rating on Global Medical and lowered the price target from $11 to $10.
Over the past month, Global Medical REIT was the top-performing REIT with a dividend yield of 8.00% or higher, with a total gain of 6.81%.
Omega Health Investors Inc. (NYSE:IHO) is a Hunt Valley, Maryland-based triple net equity healthcare real estate investment trust (REIT) that provides financing, capital and triple net leases to 73 different operators of 866 senior living, skilled nursing and assisted living communities in 42 states across the United States and the United Kingdom.
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Omega Healthcare Investors is not involved in the day-to-day management of these facilities, which are managed by the operators. Omega has real estate investments worth $9.9 billion. Texas and Indiana are the two states with the largest number of Omega facilities.
On May 2, Omega Healthcare Investors reported its first quarter 2024 operating results. AFFO of $0.68 per share beat analysts’ consensus estimate of $0.66 and exceeded AFFO of 0.66 $ per share in the first quarter of 2023. Revenue of $243.299 million was above analysts’ consensus estimate of $231.639 million and represented an 11.50% increase from revenue of $218.202 million in the first quarter of 2023. Omega Healthcare also confirmed its full-year 2024 AFFO guidance of $2.70 to $2.80.
On May 6, JMP Securities analyst Aaron Hecht reiterated Omega Healthcare’s Market Perform rating.
On June 3, Omega Healthcare announced that it would commit $10 million to Lavie Care Centers, one of Omega’s operators, to fund 50% of debtor-in-possession (DIP) financing during the bankruptcy . One of the stipulations of the DIP financing is that Lavie must pay Omega monthly rent of $3 million on the 30 properties it operates. The deal is subject to bankruptcy court approval.
While there are risks, this DIP financing could boost Omega Healthcare’s FFO over the next few years and the Street has responded favorably. Omega Healthcare Investors was the second best-performing REIT with a dividend yield of 8% or more over the past month with a total gain of 4.41%.
Eastern Government Properties Inc. (NYSE:DEA) is an office REIT that acquires, develops, manages and leases Class A commercial properties exclusively to government agencies through the General Services Administration. Eastern Government Properties owns a total of 93 properties totaling 9.1 million leased square feet in 26 states.
Easterly 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 outgoing CEO William C. Trimble, III. Mr. Trimble died in February.
Easterly has been very eventful this year. Its occupancy rate is now 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 million in additional funds. The facility will mature in four years and will have two six-month extension options. It will bear interest at the guaranteed overnight financing rate (SOFR) plus 1.20% to 1.80%.
Easterly Government Properties had 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 more. Since its IPO in February 2015, Easterly has experienced a solid history of dividend increases.
Note: 21 REITs with dividend yields of 8% or more were considered in this article. Mortgage REITs, which have very high dividend yields but are quite volatile and often cut their dividends when yields rise, were intentionally excluded. Returns are from the close of May 23 to the close of June 21.
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This item 3 High-Performing REITs with Dividend Yields Above 8% originally appeared on Benzinga.com
