According to a 2021 outlook report from National Association of Real Estate Investment Trusts, or NAREIT, this year, REITs alongside commercial real estate are set to begin healing from the wounds opened by the coronavirus pandemic, particularly in light of vaccine distribution and effectiveness.
In 2020, the REIT industry saw a number of challenges like rising vacancy rates and falling rents. For instance, the vacancy rates in offices rose 80 bps from 9.9% in the first quarter to about 10.7% in the third quarter, and it is estimated that these rates will rise this year and in early 2022. As demand in the office, apartment, retail, and industrial sectors also fell, rent growth decreased in pursuit, with retail property rents declining by 0.6% quarter-on-quarter last year, for example. Yet despite all this, REITs are among the few players that managed to remain strong in the face of the pandemic, largely because of strengthened financial positions that also allowed them to raise about $460 billion in common equity capital from 2009 to 2020. And while the above mentioned factors and lockdown impositions had resulted in losses for the REIT industry, with fund from operations (FFO) falling by 23.5% in the second quarter of 2020, the industry was able to stabilize in the third quarter, when FFO rose by 5.6%.
In light of the recovery, REITs are beginning to regain investor confidence. A research study titled Private Equity Real Estate Fund Performance: A Comparison to Listed REITs and Open-end Core Funds, has also offered data to back up the claim that investing in REITs can be more profitable for investors by offering higher returns than investing in private equity real estate (PERE) funds. The study's data set was made up of about 375 US and 255 international PERE closed end funds, and it found that in America, REIT returns surpassed risk-adjusted returns of PERE funds by about 590 basis points, and won around 68% of the matchups based on risk adjustment. Globally, REIT returns again surpassed those of PERE funds by 619 basis points on average, and beat 68% of the global PERE funds.
To add the cherry on top of the cake, it should be noted that REITs are significant contributors to the US economy. In 2019 alone, the REIT industry created about 2.6 million full-time or equivalent jobs while also generation about $173.3 billion in labor income. Moreover, the distribution of dividends from REIT stocks, as well as interest payments to investors, also supported around 489,000 jobs while generating $30.3 billion in labor income for that year. Thus, it can be rightly said that REITs are some of the biggest contributors to the US economy, while also remaining attractive investment options. As such, REIT dividend stocks can be considered good investment options like other more stable dividend stocks such as Microsoft Corporation (NASDAQ: MSFT), Apple Inc. (NASDAQ: AAPL), Visa Inc. (NYSE: V), and NextEra Energy, Inc. (NYSE: NEE).
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points. We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best REIT Stocks with High Dividend Yields
10. Great Ajax Corp. (NYSE: AJX)
Number of Hedge Fund Holders: 11 Dividend Yield: 5.2%
Great Ajax Corp. (NYSE: AJX) is a real estate company that acquires, invests in, and manages residential mortgage and small balance commercial mortgage loans. It holds real estate-owned properties too and ranks 10th on our list of the best REIT stocks with high dividend yields.
This May, B. Riley analyst Matt Howlett raised the price target on Great Ajax Corp. (NYSE: AJX) shares to $16, keeping the firm's Buy rating on the stock as well, in light of the company's first-quarter results which exceeded expectations.
In the first quarter of 2021, Great Ajax Corp. (NYSE: AJX) had an FFO of $0.30, beating estimates by $0.04. The company's revenue was $19.77 million, up 145.94% year over year, and beating estimates by $2.97 million. Great Ajax Corp. (NYSE: AJX) has also gained about 26.05% in the past 6 months and 28.14% year to date.
By the end of the first quarter of 2021, 11 hedge funds out of the 866 tracked by Insider Monkey held stakes in Great Ajax Corp. (NYSE: AJX) worth roughly $9.71 million. This is compared to 8 hedge funds in the previous quarter with a total stake value of about $15.6 million.
9. National Health Investors, Inc. (NYSE: NHI)
Number of Hedge Fund Holders: 11 Dividend Yield: 5.4%
National Health Investors, Inc. (NYSE: NHI) is a real estate investment trust working on sale-leaseback, joint-venture, mortgage, and mezzanine financing of senior housing and medical investments. It ranks 9th on our list of the best REIT stocks with high dividend yields.
This June, BMO Capital upgraded National Health Investors, Inc. (NYSE: NHI) shares from Underperform to Market Perform, keeping its price target of $71. Analyst John Kim has commented that he sees an upside for the company's dividend from here on out.
In the first quarter of 2021, National Health Investors, Inc. (NYSE: NHI) had an FFO of $1.24, missing estimates by $0.10. The company's revenue was $80.89 million, beating estimates by $1.51 million. National Health Investors, Inc. (NYSE: NHI) has also gained about 3.29% in the past 6 months and 1.85% year to date.
By the end of the first quarter of 2021, 11 hedge funds out of the 866 tracked by Insider Monkey held stakes in National Health Investors, Inc. (NYSE: NHI) worth roughly $30.1 million. This is compared to 13 hedge funds in the previous quarter with a total stake value of about $57.6 million.
8. Global Medical REIT Inc. (NYSE: GMRE)
Number of Hedge Fund Holders: 18 Dividend Yield: 5.5%
Global Medical REIT Inc. (NYSE: GMRE) is a net-lease medical office REIT operating in the health care REITs industry acquiring purpose-built specialized healthcare facilities to lease to robust healthcare systems. It ranks 8th on our list of the best REIT stocks with high dividend yields.
This July, Colliers analyst Barry Oxford began coverage of Global Medical REIT Inc. (NYSE: GMRE) shares with a Buy rating and an $18 price target. In June, B. Riley analyst Bryan Maher also raised the firm's price target on Global Medical REIT Inc. (NYSE: GMRE) shares to $18 keeping a Buy rating as well.
In the first quarter of 2021, Global Medical REIT Inc. (NYSE: GMRE) had an FFO of $0.23, beating estimates by $0.01. The company's revenue was $27.35 million, up 26.33% year over year, and beating estimates by $1.61 million. Global Medical REIT Inc. (NYSE: GMRE) has also gained about 18.62% in the past 6 months and 22.22% year to date.
By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in Global Medical REIT Inc. (NYSE: GMRE) worth roughly $36.5 million. This is compared to 8 hedge funds in the previous quarter with a total stake value of about $21.08 million.
7. W. P. Carey Inc. (NYSE: WPC)
Number of Hedge Fund Holders: 23 Dividend Yield: 5.6%
W. P. Carey Inc. (NYSE: WPC) is one of the largest net lease REITs, having an enterprise value of $18 billion, alongside a portfolio of operationally critical commercial real estate. The company ranks 7th on our list of the best REIT stocks with high dividend yields.
In June, Wells Fargo analyst Todd Stender raised the price target on W. P. Carey Inc. (NYSE: WPC) shares from $77 to $90, keeping an Overweight rating on the stock. The decision came in light of the company having had another strong financial quarter with good momentum.
In the first quarter of 2021, W. P. Carey Inc. (NYSE: WPC) had an FFO of $0.91, missing estimates by $0.24. The company's revenue was $311.17 million, up 0.70% year over year and beating estimates by $6.10 million. W. P. Carey Inc. (NYSE: WPC) has also gained about 18.49% in the past 6 months and 16.59% year to date.
By the end of the first quarter of 2021, 23 hedge funds out of the 866 tracked by Insider Monkey held stakes in W. P. Carey Inc. (NYSE: WPC) worth roughly $162 million. This is compared to 18 hedge funds in the previous quarter with a total stake value of about $197 million.
6. Iron Mountain Incorporated (NYSE: IRM)
Number of Hedge Fund Holders: 16 Dividend Yield: 5.8%
Iron Mountain Incorporated (NYSE: IRM) is a company operating in the specialized REITs industry and a global leader for storage and information management services. Its real estate network comprises of over 90 million square feet and it ranks 6th on our list of the best REIT stocks with high dividend yields.
Wells Fargo has an Overweight rating on Iron Mountain Incorporated (NYSE: IRM) shares and the firm raised its price target on the company's shares from $32 to $38 this February. Iron Mountain Incorporated (NYSE: IRM)'s 2021 revenue guidance in May came in at $4.37 billion to $4.52 billion, versus the consensus $4.36 billion.
In the first quarter of 2021, Iron Mountain Incorporated (NYSE: IRM) had an FFO of $0.63, beating estimates by $0.07. The company's revenue was $1.08 billion, up 1.25% year over year and beating estimates by $15.51 million. Iron Mountain Incorporated (NYSE: IRM) has also gained about 46.75% in the past 6 months and 51.15% year to date.
By the end of the first quarter of 2021, 16 hedge funds out of the 866 tracked by Insider Monkey held stakes in Iron Mountain Incorporated (NYSE: IRM) worth roughly $56.3 million. This is compared to 18 hedge funds in the previous quarter with a total stake value of about $64.7 million.
Like Microsoft Corporation (NASDAQ: MSFT), Apple Inc. (NASDAQ: AAPL), Visa Inc. (NYSE: V), and NextEra Energy, Inc. (NYSE: NEE), Iron Mountain Incorporated (NYSE: IRM) is a good dividend stock to buy.
One Liberty Properties, Inc. (NYSE: OLP)
Number of Hedge Fund Holders: 8 Dividend Yield: 6.2%
One Liberty Properties, Inc. (NYSE: OLP) is a real statement investment trust that is self-administered and self-managed and acquires, owns, and manages industrial, retail, restaurant, health and fitness, and theater properties. It ranks 5th on our list of the best REIT stocks with high dividend yields.
This June, Aegis analyst Brian Hollenden commenced coverage of One Liberty Properties, Inc. (NYSE: OLP) shares with a Buy rating and a $32 price target.
In the first quarter of 2021, One Liberty Properties, Inc. (NYSE: OLP) had an FFO of $0.42, surpassing the previous quarter’s FFO of $0.32. The company’s revenue was $20.68 million, also higher than the $18.72 million revenue of the previous quarter. One Liberty Properties, Inc. (NYSE: OLP) has also gained about 41.15% in the past 6 months and 50.71% year to date.
By the end of the first quarter of 2021, 8 hedge funds out of the 866 tracked by Insider Monkey held stakes in One Liberty Properties, Inc. (NYSE: OLP) worth roughly $29.01 million. This is compared to 7 hedge funds in the previous quarter with a total stake value of about $26.9 million.
4. Alexander’s, Inc. (NYSE: ALX)
Number of Hedge Fund Holders: 7 Dividend Yield: 6.4%
Alexander’s, Inc. (NYSE: ALX) is a company operating in the retail REITs industry and has seven properties to manage in the New York City metropolitan area. The stock ranks 4th on our list of the best REIT stocks with high dividend yields.
Piper Sandler has a Neutral rating on Alexander’s, Inc. (NYSE: ALX) shares with a raised price target of $280.
In the first quarter of 2021, Alexander’s, Inc. (NYSE: ALX) had an FFO of $5.03, beating estimates by $0.01. The company’s revenue was $56.15 million, up 3.78% year over year and beating estimates by $1.85 million. Alexander’s, Inc. (NYSE: ALX) has also gained about 12.14% in the past year.
By the end of the first quarter of 2021, 7 hedge funds out of the 866 tracked by Insider Monkey held stakes in Alexander’s, Inc. (NYSE: ALX) worth roughly $106 million. This is compared to 8 hedge funds in the previous quarter with a total stake value of about $109 million.
3. Omega Healthcare Investors, Inc. (NYSE: OHI)
Number of Hedge Fund Holders: 25 Dividend Yield: 7.3%
Omega Healthcare Investors, Inc. (NYSE: OHI) invests in the long-term healthcare industry and thus is a real estate investment trust operating in the healthcare REITs industry. It ranks 3rd on our list of the best REIT stocks with high dividend yields.
This June, Mizuho analyst Haendel St. Juste took over coverage of Omega Healthcare Investors, Inc. (NYSE: OHI) shares with a Neutral rating and a $39 price target.
In the first quarter of 2021, Omega Healthcare Investors, Inc. (NYSE: OHI) had an FFO of $0.85, beating estimates by $0.03. The company’s revenue was $234.82 million, up 7.66% year over year and beating estimates by $11.64 million. Omega Healthcare Investors, Inc. (NYSE: OHI) has also gained about 4.57% in the past 6 months and 6.42% year to date.
By the end of the first quarter of 2021, 25 hedge funds out of the 866 tracked by Insider Monkey held stakes in Omega Healthcare Investors, Inc. (NYSE: OHI) worth roughly $190 million. This is compared to hedge 15 funds in the previous quarter with a total stake value of about $101 million.
2. Starwood Property Trust, Inc. (NYSE: STWD)
Number of Hedge Fund Holders: 10 Dividend Yield: 7.3%
Starwood Property Trust, Inc. (NYSE: STWD) is a real estate investment trust operating in the US and Europe through its Commercial and Residential Lending, Infrastructure Lending, Property, and Investing and Servicing segments. It ranks 2nd on our list of the best REIT stocks with high dividend yields.
This May, JPMorgan raised its price target on Starwood Property Trust, Inc. (NYSE: STWD) shares from $25 to $26, keeping its Overweight rating on the stock in light of positive Q1 results.
In the first quarter of 2021, Starwood Property Trust, Inc. (NYSE: STWD) had an FFO of $0.50, beating estimates by $0.01. The company’s revenue was $287.23 million, missing estimates by $3.43 million. Starwood Property Trust, Inc. (NYSE: STWD) has also gained about 35.20% in the past 6 months and 38.12% year to date.
By the end of the first quarter of 2021, 10 hedge funds out of the 866 tracked by Insider Monkey held stakes in Starwood Property Trust, Inc. (NYSE: STWD) worth roughly $176 million. This is compared to 13 hedge funds in the previous quarter with a total stake value of about $144 million.
1. Ellington Residential Mortgage REIT (NYSE: EARN)
Number of Hedge Fund Holders: 4 Dividend Yield: 9.4%
Ellington Residential Mortgage REIT (NYSE: EARN) is a real estate investment trust specializing in the acquisition, investment, and managing of residential mortgage and real estate-related assets. The company ranks 1st on our list of the best REIT stocks with high dividend yields.
BTIG has a Buy rating on Ellington Residential Mortgage REIT (NYSE: EARN), alongside a $13.25 price target set by analyst Eric Hagen.
In the first quarter of 2021, Ellington Residential Mortgage REIT (NYSE: EARN) had an FFO of $0.31, missing estimates by $0.02. The company’s revenue was $5.75 million, up 52.18% year over year and beating estimates by $0.41 million. Ellington Residential Mortgage REIT (NYSE: EARN) has also gained about 5.46% in the past year.
By the end of the first quarter of 2021, 4 hedge funds out of the 866 tracked by Insider Monkey held stakes in Ellington Residential Mortgage REIT (NYSE: EARN) worth roughly $11.1 million. This is compared to 4 hedge funds in the previous quarter with a total stake value of about $13.05 million.
