Real estate investment trusts (REITs) were created to -- among other reasons -- provide investors with the income that comes from the requirement that at least 90% of a REITs' taxable income go to them.
That makes REITs obvious candidates for investors who want to gain income while taking advantage of the positive effects that dividends can have on the market's perception of a stock, especially in down markets.
There's a wide range of payouts among REITs. Here are three near the top in yields -- that percentage of a current stock price that's paid out in dividends -- that, along with their underlying fundamentals, makes them good stocks to consider for a July buy.
American Finance Trust
American Finance Trust (NASDAQ: AFIN) is a New York City-based REIT with a portfolio of mostly service-oriented and traditional retail and distribution-related commercial real estate whose stock was yielding 9.87% based on its June 26 closing price of $8.61 per share.
As of March 31, AFIN had 925 net lease properties in 46 states and the District of Columbia, of which 94.9% were leased. The portfolio comprises 80% retail, 11% distribution, and 9% office properties, with 71% of the retail segment in service or experiential retail businesses the company says provides e-commerce resistance. (The company's tagline is "The Necessity Retail REIT.")
At 6% of straight-line rent (SLR) each, AFIN's top two clients are the Sanofi pharmaceutical firm and Truist bank, with convenience and gas station chains on its top 10 list, along with Bob Evans, Home Depot, Dollar General, and Americold.
The company announced on June 8 that it collected 100% of its cash rent due in April and May and that so far in 2021 it had closed on or had in its forward acquisition pipeline 63 properties for approximately $238 million.
Global Net Lease
Global Net Lease (NYSE: GNL) is a New York City-based REIT that focuses on strategically located CRE properties leased to primarily investment-grade corporate tenants in the United States and northern and western Europe. GNL stock was yielding 8.63% as of its June 26 closing price of $18.54 per share.
GNL's portfolio currently contains 306 properties in 10 countries, with 130 tenants in 48 industries. The properties are 99.7% leased, with a tenant list topped by FedEx, Whirlpool, and the U.S. General Services Administration at 4% each of SLR.
Sixty-five percent of its SLR comes from the United States, with 17% from the United Kingdom and the rest from Germany, the Netherlands, Finland, France, Luxembourg, Italy, Canada, and Spain.
GNL announced on June 8 that so far in the second quarter it had collected 100% of its April and May rents and closed or had in the pipeline approximately $270 million in new acquisitions.
PennyMac Mortgage Investment Trust
PennyMac Mortgage Investment Trust (NYSE: PMT) is a Westlake Village, California-based mortgage REIT (mREIT) whose stock was yielding 8.85% based on its June 26 closing price of $21.25 per share.
PMT invests in mortgage-related assets it creates through correspondent production activities, including mortgage servicing rights and pooling, securitizing, and selling newly originated prime credit quality loans, and it's managed by a wholly owned subsidiary of PennyMac Financial Services.
It's the largest correspondent aggregator in the country, and much of its correspondent production is with Fannie Mae, the government-sponsored enterprise.
PMT's fortunes can rise and fall with interest rates and the housing market -- making its most serious bank when there are a lot of mortgages being made, and then securitized and serviced. Our Liz Brumer provides a solid primer on this in "Where Will PennyMac Investment Trust Be in 5 Years?"
The Millionacres bottom line
While each carries its own risks -- for instance, a market convulsed by the pandemic prompted PMT to reduce its dividend in April 2020 for one quarter -- the rewards are well above average in terms of dividend payout for each of these REITs.
Just be conscious of the natural urge to chase yield, a risk laid out nicely here by our Matthew DiLallo: "3 REIT Investing Mistakes to Avoid." Keep up with the factors he points out, and you should be able to have a nice ride with AFIN, GNL, or PMT, while being alert to when it might be time to reevaluate or even bail out.