Real estate investment trusts (REITs) are companies that own, operate, and/or finance income-generating real estate. Many REITs operate on a traditional landlord/tenant model, with the REIT acting as the landlord. REITs often specialize in certain types of real estate investments, including shopping malls or hospitals. Modeled after mutual funds, REITs pool the capital of multiple investors and pay dividends using the profits from their real estate investments. The main attraction of REITs is their high dividend payouts, which are often triple or quadruple the payments of most traditional equities. Because of their high dividend yields, REITs are often attractive to retirees who are looking for income-generating investments. Here are three dividend-paying REITs that will generate passive income for you.
| NYMT | New York Mortgage Trust | $3 |
| MPW | Medical Properties Trust | $12.96 |
| CIM | Chimera Investment Trust | $6.96 |
Dividend-Paying REITs: New York Mortgage Trust (NYMT)
Investors who are chasing yield should consider the New York Mortgage Trust (NASDAQ:NYMT). Its dividend currently yields 13%. Considering that NYMT stock currently trades for only $3 per share, investors can accumulate a lot of stock and obtain a healthy quarterly dividend payout.
New York Mortgage Trust is a REIT that invests in mortgage-related assets. The trust doesn’t own physical real estate outright, but rather invests capital in residential mortgage loans, preferred equity, and joint ventures. That investment strategy works well when real estate is booming, but is not so effective when the sector cools. And with interest rates marching higher, the real estate sector right now is trending downward.
Due to the market’s downturn, the New York Mortgage Trust has been reporting underwhelming earnings lately, and it has paused its asset purchases in order to safeguard its balance sheet. Still, the current slump will likely be temporary, and it’s hard to ignore NYMT’s dividend yield.
Medical Properties Trust (MPW)
Alabama-based Medical Properties Trust (NYSE:MPW) is a REIT that invests in healthcare facilities, not just in the U.S., but around the world in countries such as Australia, Colombia and Switzerland. In all, the company owns more than 400 healthcare properties globally, and it is the second-largest owner of hospital beds in the U.S.
While its dividend yield is a little lower than that of New York Mortgage Trust, Medical Properties still has an extremely high payout that yields 8.95% or 29 cents a share per quarter. MPW stock has also been gaining ground lately, having risen 16% so far in 2023. The company has raised its dividend for nearly a decade, and it benefitted greatly from the Covid-19 pandemic, with its 2020 revenue growing 46% versus 2019.
With the demand for healthcare services expected to increase alongside America’s aging population, Medical Properties Trust’s dividend can be expected to keep growing in the coming years.
Chimera Investment Corp. (CIM)
Los Angeles-based Chimera Investment Corp. (NYSE:CIM) invests in residential mortgage loans and mortgage-backed securities. The company currently has about $14 billion of assets and pays a healthy dividend that yields 13.22%. CIM stock has fallen as rising interest rates have dampened the real estate market. However, its share price has been recovering in recent months and is up 19% so far this year.
Chimera is a bit different than other REITs. The company likes to refer to itself as a “hybrid mortgage REIT.” It has a combination of mortgage-backed securities that are guaranteed by the U.S. government and non-agency securities that are not backed by anyone. Chimera also invests in whole loans and commercial mortgage-backed securities. This diversification should help Chimera as the real estate market eventually recovers.
It should be noted that Chimera cut its quarterly dividend last September to 23 cents a share from 33 cents previously due to difficult market conditions. However, the company has said it has no plans to further trim its dividend. And, with CIM’s yield remaining at 13.22%, CIM remans an attractive option.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
