March 14 is Pi Day, which honors the mathematical constant that is the ratio of a circle's circumference to its diameter.
What better way is there for income investors to recognize Pi Day than to consider buying high-quality real estate investment trusts (REITs) with dividend yields greater than 3.14%? Here are two REITs to help you do just that.
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1. National Retail Properties
The first REIT to think about purchasing for Pi Day is retail REIT National Retail Properties (NNN +0.68%), which boasts a pi-crushing dividend yield of 5%.
NYSE: NNN
Key Data Points
Yield-hungry investors need not worry whether National Retail Properties' dividend is safe for a couple of reasons.
The first reason comes down to the company's stable business model, which is what has allowed it to raise the dividend for 32 years straight. With over 3,200 properties in 48 U.S. states, National Retail Properties is a well-diversified REIT both geographically and by industry. Convenience stores, automotive services, full- and limited-service restaurants, and family-entertainment centers made up 55.3% of National Retail Properties' annualized base rent in 2021.
Coupled with National Retail Properties' initial lease terms of 15 to 20 years, this led the stock's core funds from operations (FFO) per share to compound 3.1% annually since 2015.
Secondly, National Retail Properties' dividend payout ratio in 2021 was just 73.4%. This level of dividend coverage makes it secure through just about every environment. In addition, National Retail Properties is able to retain enough capital after its dividend payout to further build its portfolio.
Best of all, investors can snatch up National Retail Properties' 5% dividend yield at a price-to-core FFO per share ratio of 14.5, based on its guidance for 2022. For context, this is moderately lower than its peer company Realty Income's price-to-FFO per share ratio of 16.8.
2. Iron Mountain
The other REIT to contemplate buying for Pi Day is Iron Mountain (IRM +0.30%), a REIT specializing in document storage, protection, and management with about 225,000 customers. Iron Mountain sports a mountainous and legitimate 5% dividend yield.
NYSE: IRM
Key Data Points
Iron Mountain's core business of records management is a very durable business model. That's because the boxes of its customers' records stay at Iron Mountain's facilities for an average of 15 years. And the company boasts a 98% customer retention rate. The best explanation for the stability of Iron Mountain's core business is that it's often easier and cheaper for customers to stay with Iron Mountain than to switch their records over to a competitor.
Iron Mountain's core business, paired with its rapidly growing data-center business, helped the company's adjusted funds from operations (AFFO) per share to grow 13.4% year over year to $3.48 in 2021. As of now, just 1,300 of its customers also use Iron Mountain's data-center services. As more of them sign on that should serve as a catalyst for steady growth. That's why Iron Mountain is anticipating 6% to 10% AFFO per share growth in 2022.
Not only does Iron Mountain offer rock-solid growth prospects for the foreseeable future, the company's 71% dividend payout ratio in 2021 isn't that far off of its low-to-mid-60% target payout ratio. This means that Iron Mountain will likely resume dividend growth shortly after this year.
Income investors can scoop up Iron Mountain's 5% dividend yield at a price-to-AFFO per share ratio of just 13. This looks like a fair price to pay, given the company's growth prospects.
