REITs with high profits and sustainable growth – Magic Post

When it comes to earning investment income, one of the most relevant investment vehicles is real estate investment trusts (REITs). REITs must distribute at least 90% of their taxable profits as dividends. This can lead to incredibly high dividend yields, sometimes reaching double digits.

Ultimately, REITs can provide significant dividend income, especially if purchased at the right price. They also provide exposure to the real estate market without having to invest in and maintain physical property. Below, I’ll detail three REITs that significantly increased their dividend payouts in 2024. All current dividend yield numbers referenced use January 13 closing prices.

Summit Hotel: Hotel REIT profits recover strongly after pandemic

Compared to 2023, Al Qimma Hotel Real Estate Company New York Stock Exchange: Download A 36% increase in total dividends for 2024 propelled the company $0.30 per share in dividends in 2024up from $0.22 in payouts in 2023. The company’s dividend payments have been recovering since they dropped to zero in 2021.

The severe hits to hotel and travel companies amid the pandemic are well known, necessitating the company’s earnings suspension. Before 2020, the company had raised its annual dividend payments or kept them stable every year since 2011. This suggests it was willing to pay out more and more to investors consistently, barring some sort of black swan event.

Based on the latest quarterly dividend of $0.08, the company’s indicated dividend yield is now 4.7%. This is a significant increase from the 3.5% yield it started the year with. The company’s profits also appear sustainable. The company’s trailing 12-month payout ratio is just 31%, based on its adjusted funds from operations (AFFO). AFFO is often considered a superior indicator of net income when it comes to valuing REITs. It excludes non-cash items such as depreciation, which can significantly impact valuable real estate assets. The use of AFFO also enables a REIT to have a payout ratio that differs significantly from the 90% distribution threshold, as it is calculated differently from taxable income.

Veris: Upscale Apartment REIT grows earnings by 2.5x

Next is the Ferris residential New York Stock Exchange: VREwhich increased its annual dividend payments by a stellar 150% compared to 2023. The company paid this dividend More than $0.26 per share On an annualized basis versus less than $0.11 per share in 2023. In each quarter of 2024, the company raised its quarterly dividend, most recently $0.08 per share.

Assuming this number is stable through 2025, the company’s indicated dividend yield is just over 2%. At the beginning of the year, the aforementioned return was 1.3%. The company’s payout ratio is also sustainable at less than 40%.

Veris primarily owns, manages, acquires and develops Class A multifamily properties. Its properties meet the needs of residents concerned about sustainability 83% of its properties are green certified. The Company’s properties are primarily located in the northeastern United States. The Tri-State, Jersey City Waterfront and Boston Metropolitan area are its primary markets. Its wealthy client base has positioned itself well over the past few years. Its revenue per household has increased by 70% since the start of 2021. However, its residents’ rising wages mean their rent makes up a smaller proportion of their income now than it did in 2021, despite the huge rent increases. This means that the company can sustainably continue raising rents.

RLJ: Yield reaches nearly 6% after 2024 increases

The last is RLJ Lodging Trust New York Stock Exchange: RLJ. Company $0.50 per share payment amount 2024 represents a 39% increase over 2023. The company’s stock price also declined significantly during that period. This means that the indicated dividend yield is now around 5.9%.

At the beginning of the year, the number was only 3.4%. The company has constantly raised its profits over the past few years. The hotel REIT was also forced to drop its payouts significantly in 2020. In 2019, it paid $1.32 in dividends per share before cutting it to just $0.04 per share the following year.

As with the other two REITs, the company has a sustainable payout ratio of around 35%. The company operates premium branded hotels, with more than 90% of its hotels using the Marriott, Hilton or Hyatt brands.

The company believes its urban-centric real estate portfolio will accrete over time, as it expects growth in this market to outpace the industry overall.

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