Real Estate Investment Trusts (REITs) distribute nearly 90% of their earnings as dividends to investors, providing a regular income source, which could be a hefty way to make some gains in a volatile market backdrop. Therefore, high-yield REITs, Ladder Capital Corp (LADR), Alexander's, Inc. (ALX), and Chimera Investment Corporation (CIM) might be worthy portfolio additions.
According to data released by the Bureau of Labor Statistics, consumer prices rose 3.3% on a 12-month basis in May compared to 3.4% in April. While this was an optimistic result, it is still higher than the Fed’s 2% target.
REITs provide natural protection against inflation. Real estate rents and values tend to increase when prices do, supporting REIT dividend growth and providing a reliable income stream even during inflationary periods.
Therefore, we think high-yielding dividend-paying REITs might give investors’ portfolios some stability. With that being said, let's delve into the fundamentals of the three featured stocks.
Ladder Capital Corp (LADR)
LADR operates as an internally managed real estate investment trust in the United States. It operates through three segments: Loans; Securities; and Real Estate.
On June 14, 2024, LADR declared a second-quarter 2024 dividend of $0.23 per share of Class A common stock, payable on July 15, 2024.
LADR pays a $0.92 per share dividend annually, which translates to an 8.39% yield on the current share price. Its four-year dividend yield is 8.70%. The company’s dividend payouts have grown at a CAGR of 4.8% over the past three years.
In terms of the trailing-12-month gross profit margin, LADR’s 75.40% is 26.3% higher than the 59.70% industry average. Its 37.29% trailing-12-month net income margin is 61.4% higher than the 23.11% industry average. Likewise, the stock’s 1.79% trailing-12-month ROTA is 67.5% higher than the 1.07% industry average.
LADR’s net interest income for the fiscal first quarter that ended March 31, 2024, was reported at $37.14 million. Net income attributable to class A common shareholders and earnings per share stood at $16.61 million and $0.13, respectively. In addition, its total assets, as of March 31, 2024, stood at $5.32 billion, compared to $5.51 billion as of December 31, 2023.
For the quarter ending December 2024, LADR’s revenue is expected to increase 27.2% year-over-year to $76.96 million. Its EPS for the same quarter is expected to increase 7.5% year-over-year to $0.34. LADR surpassed the consensus EPS estimates in each of the trailing four quarters.
LADR gained 3.8% over the past year to close its last trading session at $10.97.
LADR’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
LADR has a B grade for Stability. It is ranked first out of 45 stocks in the REITs - Diversified industry.
For additional LADR’s Momentum, Stability, Growth, Value, and Sentiment ratings, click here.
Alexander's, Inc. (ALX)
ALX is a real estate investment trust incorporated in Delaware that leases, manages, develops, and redevelops its properties.
On May 6, 2024, ALX announced an 11-year lease extension agreement with Bloomberg LP that would begin at the expiration of the existing lease in 2029. This would continue a long-standing headquarters presence at 731 Lexington Avenue through 2040.
Bloomberg, which relocated its global headquarters to the tower upon its completion, will continue to occupy all 946,815 square feet of office space in the building. The company's headquarters at 731 Lexington remains its largest globally, with 7,000 of its 12,000 New York-based employees based there.
ALX pays an $18 per share dividend annually, which translates to an 8.44% yield on the current share price. Its four-year dividend yield is 7.74%.
In terms of the trailing-12-month net income margin, ALX’s 45.97% is 423.3% higher than the 8.78% industry average. Likewise, its 7.71% trailing-12-month Return on Total Assets is 454% higher than the industry average of 1.39%. Furthermore, the stock’s 4.23% trailing-12-month ROTC is 99.3% higher than the industry average of 2.12%.
ALX’s revenues for the first quarter ended March 31, 2024, increased 16% year-over-year to $61.40 million. The company’s net income grew 43.5% year-over-year to $16.11 million, while its net income per common share increased 43.4% year-over-year to $3.14.
Moreover, the company’s non-GAAP FFO (Fund from Operations) grew 37% year-over-year to $25.53 million, and its non-GAAP FFO per share increased 37.2% year-over-year to $4.98.
Street expects ALX’s FFO for the quarter ending June 2024 to be $2.67, and revenue for the same quarter is expected to be $52.90 million.
ALX gained 15.5% over the past year to close its last trading session at $213.25.
ALX has an overall B rating, equating to a Buy in our proprietary rating system. ALX also has a B grade for Stability. It is ranked #3 out of 29 stocks in the REITs - Retail industry.
To see additional POWR Ratings for Value, Quality, Momentum, Sentiment, and Growth, click here.
Chimera Investment Corporation (CIM)
CIM is a REIT that invests in a portfolio of mortgage assets, including residential mortgage loans, agency residential mortgage-backed securities, and other real estate-related securities.
On June 13, 2024, CIM declared a second-quarter cash dividend of $0.35 per common share, an increase from its first-quarter cash dividend of $0.33 on a reverse-stock-split adjusted basis, payable on July 31, 2024.
CIM pays a $1.40 per share dividend annually, translating to a 10.3% yield on the current share price. Its four-year dividend yield is 14.5%.
CIM’s 1.58% trailing-12-month Return on Total Assets is 47.7% higher than the industry average of 1.07%. Furthermore, the stock’s 67.88% trailing-12-month net income margin is 193.7% higher than the industry average of 23.11%.
CIM’s net interest income for the first quarter ended March 31, 2024, was reported at $65.11 million. The company’s net income grew 125.6% year-over-year to $129.45 million. Net income per share available to common shareholders increased 164.7% year-over-year to $0.45.
Street expects CIM’s revenue for the quarter ending June 2024 to increase 8.4% year-over-year to $71.20 million. Its EPS is expected to be $0.36 for the same quarter.
The stock gained 7.5% intraday to close the last trading session at $12.83.
It’s no surprise that CIM has an overall rating of B, which translates to Buy in our POWR Ratings system. CIM also has a B grade for Growth, Value, and Quality. It is ranked #4 in the 27-stock REITs - Mortgage industry.
Beyond what is stated above, we’ve also rated CIM for Stability, Sentiment, and Momentum. Get all CIM ratings here.
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LADR shares were trading at $11.11 per share on Monday afternoon, up $0.14 (+1.28%). Year-to-date, LADR has declined -1.40%, versus a 15.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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