A big yield can be quite attractive and also a warning sign. Consider Medical Properties Trust (MPW -1.10%), a real estate investment trust (REIT) that owns hospitals and medical office buildings. The stock currently sports a dividend yield of about 11.6%. However, that's because the share price has tumbled more than 35% over the past year as some of the company's tenants have had difficulty paying their leases.

On top of that, the dividend may be at risk because so much of the company's operating cash flow is going toward servicing its dividend, leaving little room left over for expansion or even normal capital expenditures. Medical Properties' payout ratio based on funds from operations (FFO) ballooned to 138% in the first quarter.

For income-seeking investors, two other REITs might be worth considering instead: Healthpeak Properties (DOC 2.51%) and Innovative Industrial Properties (IIPR -0.17%). Both also have high dividend yields but substantially less risk. Let's take a closer look.

Healthpeak increasing revenue, FFO

Healthpeak's shares have fallen more than 16% to start the year, but despite its relative unpopularity, I see the stock as a potential bargain. The company specializes in medical research facilities and medical office buildings. One reason for the stock's decline is that life sciences companies have fallen out of favor with investors, but Healthpeak's financials appear strong.

In the first quarter, Healthpeak reported revenue of $525.7 million, up 5% year over year, while adjusted funds from operations (AFFO) was up slightly to $0.38, compared to $0.37 in the same period last year. 

The company's quarterly dividend, though it has a yield of roughly half that of what is being delivered by Medical Properties Trust, is a lot safer. It has been $0.30 the past three years, which equates to a yield of around 5.74%, and a FFO payout ratio of 86% in the first quarter, along with an AFFO payout ratio of 71%. Both numbers are within the safety guidelines for a REIT, which is required to disburse 90% of its taxable income to shareholders.

Healthpeak has had its own tenant difficulties, with Sorrento Therapeutics, which leased four properties from Healthpeak, undergoing bankruptcy proceedings. Despite the bankruptcy, Healthpeak said that through April 27, it had received all contractually owed rent from Sorrento and is already shopping around a San Diego facility it was building for Sorrento to other prospective tenants. 

Looking ahead, Healthpeak has said it expects FFO per share of $1.70 to $1.76 this year, compared to $1.66 in 2022.

Healthpeak's focus on life sciences companies should pay off in the long run. Life sciences analytics, seen as a $10.3 billion market in 2023, is expected to grow at a compound annual growth rate (CAGR) of 7.71% into a $14.8 billion market by 2028, according to a report by Mordor Intelligence.

Moreover, many life sciences companies are turning to artificial intelligence (AI) to find ways to repurpose old drugs and to discover novel therapeutics. The high cost of developing drugs and the rising healthcare needs of our aging population are driving growth of life sciences companies.

Innovative Industrial Properties remains solid

Innovative is the largest cannabis REIT. It specializes in buying grow facilities from cannabis retailers and then leasing them back with triple-net leases.I nnovative's shares are down more than 22% this year. Like Healthpeak, the decline is due more to concerns about the company's tenants rather than the REIT's own strengths or weaknesses.

While the industry in general has been struggling, Innovative is coming off a surprisingly strong first quarter. It reported revenue of $76.1 million, up 18% year over year. It also said it had AFFO per share of $2.25, up 10% from the same period last year. During the quarter, the company collected 98% of its first-quarter rents.

Innovative's dividend was raised this year by 16% to $1.80 a share, giving it a yield of around 9.2%. Over the past five years, the company has increased its dividend by 414%. Even with the increases, its AFFO payout ratio is around 80%, though its FFO payout ratio in the first quarter was 93.75%.

It's important to remember, too, that the cannabis industry, despite short-term headwinds, is expected to continue to grow significantly as more states open to legal medicinal and recreational sales. According to a report by Grand View Research, the global legal marijuana market was $16.7 billion last year and is expected to grow at a CAGR of 25.4% through 2030, from a $21 billion market this year into a $102.2 billion market by 2030.

With that type of growth, the need for grow facilities is likely to increase, driving up the need for Innovative's services as well.