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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,” i.e., stocks that are in danger of having their dividend cut.
One way to reduce the risk of poor performance or dividend cuts is by looking at recent performance versus peers. Strong relative strength often indicates that the risks of entering a yield trap or share price decline are low.
Take a look at three real estate investment trusts (REITs) with dividend yields over 8% that have outperformed other high-yielding REITs within the past month.
Global Medical REIT Inc. (NYSE:GMRE) is a Bethesda, MD-based net-lease health care REIT that owns and operates 185 properties with 268 tenants and over $4.7 million net leasable square feet of specialized facilities that it leases to health care systems and physician groups throughout the U.S. Its most recent occupancy rate was 96.4%, and its 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 the results of Q1 2023. Revenue of $35.069 million beat the estimate of $33.938 million but lagged behind Q1 2023 revenue of $36.199 million.
On May 13, B. Riley Securities analyst Bryan Maher maintained Global Medical’s Buy rating and lowered the price target from $11 to $10.
Over the past month, Global Medical REIT was the best-performing REIT with an 8.00% or higher dividend yield, with a total gain of 6.81%.
Omega Healthcare Investors Inc. (NYSE:OHI) is a Hunt Valley, MD triple-net equity health care Real Estate Investment Trust (REIT) that provides financing, capital, and triple-net leasing to 73 different operators among 866 senior housing, skilled nursing, and assisted living facilities in 42 states in the U.S. and the United Kingdom.
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Omega Healthcare Investors has no part in the day-to-day management of these facilities, which are run by the operators. Omega has $9.9 billion worth of real estate investments. 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 the analyst consensus estimate of $0.66 and topped AFFO of $0.66 per share from Q1 2023. Revenue of $243.299 million was above the analyst consensus estimate of $231.639 million and was an 11.50% increase over revenue of $218.202 million in Q1 2023. Omega Healthcare also affirmed its full-year 2024 AFFO guidance of $2.70-$2.80.
On May 6, JMP Securities analyst Aaron Hecht reiterated a Market Perform rating on Omega Healthcare.
On June 3, Omega Healthcare announced it would commit $10 million to Lavie Care Centers, one of Omega’s operators, to fund 50% of debtor-in-possession (DIP) financing during bankruptcy. One of the DIP financing stipulations is that Lavie must pay Omega monthly rent of $3 million on the 30 properties that it operates. The agreement is subject to approval by the bankruptcy court.
Although risks are involved, this DIP financing could increase Omega Healthcare’s FFO over the next few years and the street responded favorably. Omega Healthcare Investors was the second-best-performing REIT with an 8% or better dividend yield over the past month with a total gain of 4.41%
Easterly Government Properties Inc (NYSE:DEA) is an office REIT that acquires, develops and manages Class A commercial properties and leases them solely to government agencies through the General Services Administration. Easterly Government Properties owns a total of 93 properties with 9.1 million leased square feet across 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 Jan. 1, 2024, replacing retiring CEO William C. Trimble, III. Mr. Trimble passed away in February.
There is much to notice in Easterly’s news since the start of the year. Its occupancy rate is 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 will mature in four years and have 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 had a 4.13% total return over the past four weeks, making it the third-best-performing REIT with an 8% or better dividend yield. Since its IPO in February 2015, Easterly has had a solid history of dividend increases.
Note: 21 REITs with dividend yields of 8% or higher were considered for this article. Mortgage REITs (mREITs), which have very high dividend yields but are quite volatile and often cut dividends when yields rise, were purposely excluded. Returns are from the close on May 23 to the close on June 21.
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This article 3 Strongly Performing REITs With Dividend Yields Over 8% originally appeared on Benzinga.com
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