The 15 Highest-Yielding Real Estate Stocks

Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks.

The highest dividend yields can be very tantalizing. As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock. Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business, and driven down its stock price. However, certain types of companies, such as REITs have to pay out most of their income as dividends, so their yields will be higher than "normal." Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.

I've already screened for the 25 Highest-Yielding Dividend Stocks. Now, I'm touring the market to find the highest-yielding stocks in each industry. Today, we're looking at the real estate industry, and screening for stocks with a market cap greater than $500 million.

Here are the top 15 highest yielding stocks the screen produced:

 

Company

Market Cap (in millions)

Dividend Yield (%)

Payout Ratio (%)

1

American Capital Agency (Nasdaq: AGNC  )

$911.5

20.5

74.8

2

Chimera Investment (NYSE: CIM  )

$3,426.7

17.6

68.6

3

Annaly Capital Management (NYSE: NLY  )

$10,550.2

15.9

139.7

4

Hatteras Financial (NYSE: HTS  )

$1,062.8

15.5

97.7

5

Anworth Mortgage Asset Corporation (NYSE: ANH  )

$778.5

14.9

109.3

6

Invesco Mortgage Capital (NYSE: IVR  )

$538.4

14.3

65.5

7

Capstead Mortgage (NYSE: CMO  )

$805.1

12.3

146.6

8

MFA Financial (NYSE: MFA  )

$2,047.7

10.4

100.4

9

Hospitality Properties Trust (NYSE: HPT  )

$2,408.6

9.14

97.0

10

Sun Communities (NYSE: SUI  )

$539.8

8.88

NM

11

Medical Properties Trust (NYSE: MPW  )

$1,067.1

8.36

305.3

12

Investors Real Estate Trust (Nasdaq: IRET  )

$633.0

8.32

992.1

13

CommonWealth REIT (NYSE: CWH  )

$1,551.0

8.27

148.5

14

Getty Realty (NYSE: GTY  )

$733.9

7.75

95.4

15

Inland Real Estate (NYSE: IRC  )

$662.4

 7.3

NM

Source: Capital IQ, a division of Standard and Poor's. NM = not meaningful due to negative earnings.

These stocks are a good place to start your research, but they're not formal recommendations. Remember, their seemingly irresistible yields could be ticking time bombs, so do your own due diligence. Also, make sure you diversify your picks across various sectors. As investors relearn every decade or so, you never want to put all your eggs in one basket -- no matter how tempting the dividends are.

Interested in any of these stocks? Hungry for more? If you want more thoroughly vetted suggestions, check out Jordan DiPietro's "The Best Dividend Stock. Period." or Jim Royal's "Dividend Play for a Lifetime."

Dan Dzombak did not have a position in any of the companies mentioned in this article. The Fool owns shares of Annaly Capital Management. The Fool's disclosure policy loves it some dividends.


Read/Post Comments (3) | Recommend This Article (34)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 30, 2010, at 2:16 PM, cmfeldman wrote:

    DIVIDENDS SEEM STRAIGHTFORWARD, BUT ARE ACTUALLY CONFUSING. THEY WORK LIKE A STOCK SPLIT. YOU MAY HAVE MORE SHARES, BUT THE OVERALL VALUE OF THE STOCK HAS NOT CHANGED. IF YOU OWN A STOCK THAT YIELDS A 15% ANNUAL DIVIDEND, AT THE QUARTERLY POINTS THAT THE DIVIDEND IS PAYED OUT, THE STOCK PRICE WILL ALSO BE ADJUSTED DOWN BY THE AMOUNT OF THAT DIVIDEND. SO, IF A STOCK NEVER GOES UP IN PRICE, YOU'RE 15% ANNUAL DIVIDEND WILL MAKE YOU 0% IN A YEAR, NOT 15%.

  • Report this Comment On August 30, 2010, at 2:27 PM, EnigmaDude wrote:

    Resource Capital (RSO) should also be considered for those interested in high yield REITs - if those investors are willing to accept a bit more risk. It did not make your screen because their market cap is only about $300M. However, the dividend yield is well over 15% and the P/E is less than 5. With an ROE of nearly 20% this is one stock to keep an eye on for growth and income.

  • Report this Comment On October 19, 2010, at 8:10 AM, kayakmastr2 wrote:

    CMF, doesn't the stock dip because earnings were paid out, so as earnings accumulate again, the value will return and the price will be restored, assuming the only issue is the balance between earnings and dividends?

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