Real Estate Investment Trusts, or REITs, are companies that own, operate, or finance income-producing real estate assets across various sectors, such as residential, commercial, industrial, and specialized niches, like healthcare or data centers. Established to provide everyday investors with access to large-scale real estate investments, REITs function much like mutual funds, pooling investor capital to acquire and manage properties.
Notably, by law, they must distribute at least 90% of taxable income to shareholders in the form of dividends. As a result, REITs are popular with investors seeking a stable source of passive income who also want exposure to the real estate market and the possibilities for capital appreciation in those projects.
Now, with the Federal Reserve expected to cut interest rates again in December, which should support the industry, real estate is worth a look for yield-seeking investors. Here are three high-yield REITs to consider this November.
#1. VICI Properties
Formed in 2017 as part of Caesars Entertainment's bankruptcy restructuring, VICI Properties (VICI) is a REIT specializing in experiential real estate, primarily properties in the gaming, hospitality, and entertainment sectors. Its portfolio consists largely of gaming and entertainment properties, including well-known locations such as Caesars Palace Las Vegas, MGM Grand, and various other notable casinos. Its market cap currently stands at $32.8 billion.
Shares of the REIT are down 1.8% on a YTD basis, while its dividend yield is a generous 5.54%. The REIT raised its quarterly dividend in Q3 by 4.2% to $0.4325 per share.
Its results for the latest quarter were impressive, with both revenue and funds from operations (FFO) per share surpassing estimates. Total revenues increased by 6.7% year-over-year to $964.7 million. Further, FFO per share rose by 27.3% in the same period to $0.70, outpacing the consensus estimate of $0.67.
VICI also enhanced its real estate portfolio in the quarter to a value of $43.5 billion from $42.5 billion at the start of the year. Comparatively, net debt levels remained stable at the end of the quarter at $16.7 billion.
Notably, VICI Properties holds a significant competitive edge with its high-value, high-revenue portfolio, featuring an average rent per asset exceeding $32.9 million—remarkably higher than the typical triple-net REIT average of approximately $400,000. Additionally, VICI's properties deliver reliable, predictable income due to an average remaining lease term of about 41 years, in contrast to the typical 8-14 years found in other REITs. Moreover, VICI’s prominent presence on the Las Vegas Strip strategically positions it in one of the world’s most frequented tourist destinations.
Analysts have an average rating of “Strong Buy” for VICI stock with a mean target price of $35.84. This denotes an upside potential of about 14.5% from current levels. Out of 21 analysts covering the stock, 17 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 3 have a “Hold” rating.
#2. Ladder Capital
Founded in 2008, Ladder Capital (LADR) is a REIT specializing in commercial real estate finance, particularly focused on lending and investing in senior secured assets. Its three main business lines are loans, securities and real estate. Its market cap currently stands at $1.5 billion.
LADR is up by a modest 1.3% on a YTD basis. The REIT offers a healthy dividend yield of 7.93%, which is considerably higher than the sector median.
Notably, Ladder Capital's results for the latest quarter saw the company reporting a beat on both revenue and earnings. Net interest income, the proxy for revenues for finance companies, came in at $38.4 million for the quarter. This represented yearly growth of 12%. Earnings rose in the latest quarter by almost 10% on a YoY basis to $0.34, coming in ahead of the consensus estimate of $0.26. Impressively, this marked the 14th consecutive quarter that LADR beat Wall Street's earnings estimates.
The company closed the quarter with a cash balance of $1.6 billion, up from about a billion dollars at the start of the year, while net debt declined to $3.6 billion from $3.8 billion at the beginning of the year.
Ladder Capital significantly reduced its provision additions in the third quarter, highlighting the strong performance of its portfolio. This decision indicates that management doesn't see any concerning trends in interest collection.
Overall, analysts have a rating of “Strong Buy” for LADR stock, with a mean target price of $13.36 - roughly 14.6% higher than current levels. Out of 7 analysts covering the stock, 4 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 1 has a “Hold” rating.
#3. Omega Healthcare
We conclude our list of high dividend-yielding REITs with Omega Healthcare (OHI). Omega is a healthcare-focused REIT specializing in skilled nursing and assisted living facilities, providing capital to operators in the long-term healthcare industry. Founded in 1992, Omega’s tenants are often healthcare service providers, with long-term leases that generate stable rental income, making it an income-focused investment. The REIT's market cap is currently $11.05 billion.
Shares of the OHI REIT are up 30.7% on a YTD basis, outperforming the S&P 500 Index ($SPX) and the Nasdaq Composite ($NASX). The REIT offers a dividend yield of 6.54%, which is higher than the sector median.
In the latest quarter, Omega reported a beat on both the top and bottom lines. Revenues for the quarter ended Sept. 30, 2024 totaled $276.0 million, a rise of 14% from the previous year, aided by the 10.5% increase in rental income to $227.8 million for the same period. FFO came in at $0.71 per share, up 12.7% from the prior year.
Real estate assets moved higher to close the quarter at $8.9 billion, up from $8.3 billion at the start of the year, with a cash balance of $342.4 million. Further, net debt declined to $4.6 billion from about $5 billion at the beginning of the year.
Omega Healthcare Investors holds a unique position in a growing market driven by the rapidly increasing population of Americans aged 65 and older, now at a historic growth rate. Omega’s portfolio comprises 866 facilities under triple-net leases, with 96% of the rent tied to master leases. Additionally, 93% of Omega's rent and interest income are tied to fixed-rate escalators, with an average escalator rate of 2.2%. The company’s robust portfolio of long-term leases has an average duration of 9.4 years.
Looking ahead, Omega’s revenue remains well-protected, as 95% of its leases don’t expire until after 2026, with over 50% extending past 2033. This combination of long-term, fixed-escalator leases and new investments is expected to provide steady revenue growth in the years to come.
On average, analysts have deemed the stock a “Moderate Buy,” with a mean target price of $42.07. Out of 17 analysts covering the stock, 5 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 11 have a “Hold” rating.
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