Can These REITs Continue Paying 9% Dividend Yields?

With inflation rising above 8% recently, many income investors would love to find dividend stocks that pay more than 9% per year.

But are high yield real estate investment trusts (REITs) good stocks too? Many are off their 52-week highs. Are dividend cuts in the future? Here are three monthly dividend-paying REITs with yields over 9% to consider:

Medical Properties Trust Inc. (NYSE: MPW) is a Birmingham, Alabama-based healthcare REIT that owns and operates 438 properties across the US, Europe and Australia.

Medical Properties Trust stock pays a monthly dividend of 29 cents. The most recent quarter produced $1.72 in funds from operations (FFOs) – more than enough to cover 87 cents for three months of dividend payments.

Raymond James analyst Jonathan Hughes recently maintained a strong buy rating on Medical Properties Trust, lowering the price target from $20 to $18. That is well above its recent price of close to $11.60. The stock has already lost nearly 50% of its value since January, pushing the current annual return up to 9.9%.

The market fears that its largest tenant, Steward Health Care System, may not be able to pay its rent if a prolonged recession occurs. While that could prompt a dividend cut, Medical Properties Trust is well diversified and should be able to weather that storm. It is also possible that a possible cut is already baked into the stock price, and if Medical Properties Trust did not cut the dividend, the price could recover.

Gladstone Commercial Corp. (NASDAQ: GOOD) is a diversified net leasing office and industrial REIT that owns and leases 136 properties to 112 tenants. Its occupancy rate was over 97% recently.

Gladstone Commercial pays an annual dividend of 81 cents, yielding 9.5%. Year to date it has lost about 35% of its value. There are no recent analyst ratings.

The FFO of 39 cents in the latest quarterly report is enough to cover three months of dividend payments. But like most other office and industrial REITs, a recent good quarter has not been enough to support the stock price.

Looking ahead, Gladstone Commercial should be able to maintain its dividend. The recent acquisition of two commercial properties in Alabama and Florida shows that it is optimistic that it will be able to withstand the difficulties of a recession.

Properties of EPR (NYSE: EPR) is a diversified experiential REIT that owns and operates 358 movie theater chains, amusement parks, resorts and other entertainment venues.

One negative that weighed heavily on EPR Properties’ stock price in September was the announcement that Cineworld Group plc had filed for bankruptcy. Cineworld is the parent company of Regal Entertainment Group, which is EPR Properties’ third largest tenant and a producer of 13.5% of its rental income. EPR Properties owns 173 movie theaters and Wall Street fears that other theaters could soon follow Cineworld’s lead in the event of a severe recession.

EPR Properties pays a monthly dividend of $0.275. Second quarter FFO of $1.23 was above analysts’ expectations and well above the $0.825 needed to cover three months of dividend payments. The current annual yield is 9.1%.

Last month, Raymond James Milligan analyst maintained a buy rating on EPR Properties while lowering the target price from $64 to $55. That’s still 51% from its recent price of $36.20. But remember, analysts are not always right.

At the moment the dividend does not seem to be in danger of being cut. But that could change if more theater chains owned by EPR Properties declare bankruptcy. The stock has shown some resilience over the past few days, but investors may want to wait a little longer to see if EPR Properties is really bottoming out.

Related: This Well-Known Small REIT Has Shown Double Annual Returns Over the Past Five Years of Production

Today’s Private Market Insights:

Diversified RAD RAD REIT has a declared dividend yield of 8%. The REIT has averaged 27% annualized gains since inception.

QC capital launched its latest real estate fund with a target annual return of 15% to 19%

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