7 High-Dividend REIT Stocks

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By Matt Frankel, Motley Fool Financials 7 High-Dividend REIT Stocks 1

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1. Realty Income Corp. (NYSE:O) Share Price: $52.05 Dividend Yield: 4.37% Frequency: Monthly Type of real estate investments: Retail 2 April 7, 2015

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Realty Income owns more than 4,300 retail properties 98.4% occupancy rate, which has never fallen below 96% Tenants sign long-term leases (15 years or more) with rent increases built in, and pay variable expenses such as taxes, insurance, and maintenance Since going public in 1994, Realty Income has increased its dividend 80 times, by an average of 4.7% per year Average annual total returns of 17.1% over the past 20 years Largest tenants are Walgreen’s, FedEx, and Dollar General April 7, 2015 3 Realty Income Corp (NYSE: O)

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2. American Campus Communities (NYSE: ACC) Share Price: $43.36 Dividend Yield: 3.51% Frequency: Quarterly Type of real estate investments: Student housing 4 April 7, 2015 www.audio-luci-store.it via flickr

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American Campus Communities builds and operates student housing communities Currently has 163 properties in 74 university markets Target market is 4-year public institutions with enrollment greater than 15,000 3 largest markets (by income) are Arizona State University, University of Texas at Austin, and Texas A&M Average occupancy rate of 97.7% and average rental growth of 2.4% annually Seeks growth through acquisitions, as well as through development of new properties April 7, 2015 5 American Campus Communities (NYSE: ACC)

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3. Chambers Street Properties (NYSE: CSG) Share Price: $7.92 Dividend Yield: 6.44% Frequency: Monthly Type of real estate investments: Industrial and office properties 6 April 7, 2015 Source: wikipedia

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Chambers Street’s portfolio consists of 42% industrial and 58% office properties 128 total properties with nearly 38 million rentable square feet The portfolio is geographically diverse, as well as diversified across different industries 98.3% occupancy rate Has been focused on debt reduction and selective acquisitions of new industrial properties Most tenants are on “triple-net” leases, which means they pay taxes, insurance, and maintenance as part of the rent Top tenants are Amazon.com, Barclays, and Raytheon April 7, 2015 7 Chambers Street Properties (NYSE: CSG)

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4. Annaly Capital Management (NYSE: NLY) Share Price: $10.45 Dividend Yield:11.48% Frequency: Quarterly Type of real estate investments: Agency Mortgages 8 April 7, 2015 Source: 401kcalculator.org

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Annaly invests in high-quality, agency guaranteed mortgages Most of the portfolio (95%) consists of fixed-rate mortgages In order to produce high returns, Annaly uses leverage (borrowed money) to finance its investments The company’s profit is the “spread” between the interest rate it pays and the interest rate is collects from the mortgages Current leverage ratio is 5.4:1 The downside is that this business model is very vulnerable to interest rate spikes, since that can cause the spread to narrow Shares currently trade for a 20% discount to book value April 7, 2015 9 Annaly Capital Management (NYSE: NLY)

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5. PennyMac Mortgage Investment Trust (NYSE: PMT) Share Price: $21.34 Dividend Yield: 11.43% Frequency: Quarterly Type of real estate investments: Distressed mortgages 10 April 7, 2015

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Unlike most mortgage REITs, PennyMac primarily invests in distressed mortgage loans Since distressed mortgages can be bought at a discount to underlying property values and pay higher yields, PennyMac can produce high dividends without much leverage Current leverage ratio is 2:1, unlike most mortgage REITs which use 5:1 or higher PennyMac has increased its dividend consistently since going public Dividend has risen 7% over the past two years April 7, 2015 11 PennyMac Mortgage Investment Trust (NYSE: PMT)

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6. Health Care REIT Inc (NYSE: HCN) Share Price: $77.83 Dividend Yield: 4.24% Frequency: Quarterly Type of real estate investments: Health care properties 12 April 7, 2015 Photo: pixabay

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Health Care REIT was the first of its kind, founded in 1970 Currently owns more than 1,300 properties with an enterprise value of $37 billion Properties include senior housing, LTC facilities, medical offices, and more Great growth opportunity, as the 75+ population is projected to grow more than five times as fast as the overall U.S. population Strong balance sheet, good access to capital 16.1% average annual return since inception April 7, 2015 13 Health Care REIT Inc (NYSE: HCP)

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7. Digital Realty Trust (NYSE: DLR) Share Price: $65.84 Dividend Yield: 5.16% Frequency: Quarterly Type of real estate investments: Data centers 14 April 7, 2015 Photo: wikipedia

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Digital Realty Trust owns data centers in America, Europe, Asia, and Australia The company maintains a conservative capital structure, and has investment-grade credit ratings Dividend has increased at an average rate of 14% per year Diversified group of high-quality tenants No single tenant represents more than 7.2% of revenue Major tenants include CenturyLink, IBM, Facebook, AT&T, and Morgan Stanley April 7, 2015 15 Digital Realty Trust (NYSE: DLR)

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