When I think about REITs (Real Estate Investment Trusts) I think about exposure to real estate and high yields. I don’t usually think about dividend growth.
There are right around 165 REITs (full list here) that we can invest in that yield 2%+ and trade above $5 a share. Almost half of these stocks have a positive 3 year dividend growth rate which is not all that surprising considering where we were 3 years ago. The real standouts are those companies that increase their dividend year after year.
Only 13 REITs have boosted dividends in each of the last 5 years, and only 9 have done it for 10 years. Because REITs are required to payout 90% of net income to shareholders I think it means more when a REIT can boost its dividend each year. It shows a solid track record of successful execution in increasing income.
A few of these stocks could soon find themselves on one of the best dividend lists. I like a lot of the stocks on this list, especially DLR, FRT and a few of the healthcare REITs. The current valuation of these stocks makes me want to take my time buying in.
|Yrs of Div
|Health Care REIT
|Digital Realty Trust
|Equity Lifestyle Properties
|Omega Healthcare Investors
|Senior Housing Properties
|Urstadt Biddle Properties
|Realty Income Corporation
|Essex Property Trust
|National Retail Properties
|Tanger Factory Outlet Centers
|Universal Health Realty Income
|Federal Realty Investment
REITs are not easy to evaluate but yield and dividend growth are a good place to start. It’s important to also factor in what the companies main focus of business is and what the future expectations are of that business. A lot of mortgage based REITs could be in for trouble when rates start to rise.