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3 High-Dividend REITs to Buy Right Now


[Updated: Mar 04, 2021 ] Jun 17, 2020 by Kevin Vandenboss
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The past 30 days have helped give investors some direction as to where high-dividend real estate investment trusts (REITs) will be heading in the months and years to come as cities and businesses have started opening back up across the country.

These positive steps came just in time for some of the hardest-hit REITs. Even REITs that haven't been affected as negatively by the pandemic are benefiting from the improvement in investor confidence that June is bringing. This is making June a prime month to buy these three high-dividend REITs that are coming out swinging.

Stock symbol Dividend yield Q1 FFO Market cap
IRM 8.15% $218.19 $8.55B
VICI 5.2% $177.94B $12.27B
MGP 6.21% $180.91M $3.82B

Iron Mountain

Iron Mountain (NYSE: IRM) provides storage and information management services. It leases storage space for hard copies of sensitive information as well as valuable artifacts and artwork. Besides physical storage, Iron Mountain owns 14 data centers for leasing digital storage space. Iron Mountain's customer base currently includes 95% of the Fortune 1000.

Iron Mountain has a solid foundation with its core storage business while it expands its digital storage capacity. While the number of incoming boxes has declined, over 50% of its new leases from last year will remain in storage for at least 15 years.

Their storage business accounts for 64% of total revenue, providing stability as it continues to expand its growing digital storage services. Iron Mountain currently has 89.8% of its 3.5 million square feet and 120.6 megawatts of capacity leased.

While its share price is still -6.76% for the year, at the time of writing, first-quarter revenue is up 3.3% year over year. Also, its data center leasing saw organic growth of 9.9%.

Iron Mountain has been showing strong performance and has already started construction on new data centers this year. Now looks like a great time to buy while the share price is still down and it's paying dividends of over 8%.

VICI Properties Inc.

Gaming and resort REITs were difficult to call a great buy a month ago while the country was still mostly shut down. However, cities and businesses across the U.S. have been opening back up over the past 30 days. These positive steps forward have been great news for the resort and gaming industries.

Roughly 29% of VICI Properties Inc's (NYSE: VICI) portfolio is in Las Vegas, which has recently opened back up. The Nevada Gaming Commission approved measures to keep customers safe, which they're hoping will help ease concerns for people considering returning to Las Vegas.

A major triple-net tenant for VICI in Las Vegas is Caesar's Palace (NASDAQ: CZR), which contributes $207.7 million in annual rent with annual CPI rent escalations. Caesar's currently has 12 years left on a 15-year lease. The casino is currently working through the final stages of a merger with Eldorado Resorts (NASDAQ: ERI), which will significantly improve Caesar Palace's strength as a tenant.

VICI is also sitting on an opportunity to expand on the Las Vegas strip with an option on 18 acres for the Caesar's Forum Convention Center. Las Vegas is expected to see overall growth in general with the new stadium and several companies moving in their headquarters.

VICI is still down from its COVID-19 hit in February and is currently paying a safe dividend yield of 5.2%. With VICI's growth prospects, its proven ability to handle the 2007-2008 economic crisis, and its still-recovering price, the REIT is looking like an excellent buy opportunity for June.

MGM Growth Properties, LLC

Another gaming and resort REIT, MGM Growth Properties (NYSE: MGP) owns the MGM Casino real estate and a joint venture in Mandalay Bay. Similar to VICI Properties, MGM Growth Properties is seeing some light at the end of the tunnel as cities across the U.S. reopen, and most importantly, Las Vegas.

As the REIT's name suggests, its major tenant is MGM Resorts. Besides the MGM-branded casinos and resorts, MGM Resorts also owns and operates well-known casinos, such as Bellagio, Luxor, Excalibur, Mandalay Bay, and several others.

When looking at a REIT like MGM Growth Properties, one of the first things you want to look at is the health and stability of its tenants. There has been a lot of nail biting as casinos along the Las Vegas strip have been waiting to see how well travel into the city would resume since fears of coronavirus haven't disappeared.

The outlook is promising so far, as traffic is already increasing into Las Vegas, and McCarran International Airport is seeing an increase in daily inbound flights.

One of the more significant risks with MGM Growth Properties has been the fact that its tenant, MGM Resorts, owns a major stake in the REIT, causing a bit of a conflict of interest. However, MGM Growth Properties covered a $700 million redemption of operating units from MGM Resorts in May, reducing its stake in the REIT.

This redemption is a win-win for each company for a variety of reasons:

  1. It gives MGP more independence from their tenant, which Moody's (NYSE: MCO) sees as a positive move.
  2. It adds more liquidity to MGM's balance sheet.
  3. The improved cash position decreases the chances of any rent interruptions.
  4. MGP increased dividends as a result of the transaction.
  5. The higher dividends adds more cash flow into MGM.

What's good for MGM is good for MGP, and both appear to be heading in a positive direction. MGM Growth Properties is recovering well and still has room to make a buy on its way up. With a current dividend yield of 6.21%, this looks like a good opportunity to get in on the stock now.

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Kevin Vandenboss owns shares of Iron Mountain and MGM Growth Properties (Class A). The Motley Fool owns shares of and recommends Moodys. The Motley Fool recommends MGM Growth Properties (Class A). The Motley Fool has a disclosure policy.