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5 Top REITs to Buy With Dividends Over 5%

Real estate investment trusts (REITs) are a great source of passive income. The average REIT currently offers a dividend yield above 3%, more than double that of the S&P 500. 
Meanwhile, some REITs offer even higher dividend yields. Five top-quality REITs currently paying more than 5% are ERP Properties (NYSE: EPR), SL Green Realty (NYSE: SLG), Medical Properties Trust (NYSE: MPW), Store Capital (NYSE: STOR), and W.P. Carey (NYSE: WPC).
Image source: Getty Images.

A great income experience
ERP Properties is a specialty REIT focused on experiential real estate like movie theaters and attractions. It leases these properties back to the operator under a triple net lease (NNN). Those rental agreements produce reasonably stable cash flow to support its 6.3%-yielding monthly dividend.
The REIT has a sensible dividend payout ratio of 75% of its adjusted funds from operations (AFFO). Meanwhile, it has a solid investment-grade balance sheet. Those features give it the financial flexibility to purchase more experiential real estate, which should grow its cash flow to support future dividend increases. The REIT has already increased its payout by 10% this year. With it expecting to acquire $500 million to $700 million of properties in 2022, it should have plenty of capacity to grow the dividend in the future. 
Steadily rising to the sky
SL Green Realty is the largest office landlord in Manhattan. It owns some of the top properties in the city, which are in high demand even as more companies move to hybrid workforces in the future. Because of that, rental rates and occupancy levels have held up reasonably well, providing the office REIT with the income to support its 5.3%-yielding monthly dividend.
SL Green recently increased that payout by 2.5%, its 11th straight year of dividend growth. It should be able to continue growing that payout in the future. The REIT recently made its first office acquisition in years, buying 450 Park Avenue for $445 million. Meanwhile, it’s moving forward with its One Madison Avenue development project. SL Green recently secured IBM as an anchor tenant for the property and sold another interest in the $2.3 billion development to a joint venture partner. These investment opportunities, combined with the recovery in the Manhattan office market, should help grow SL Green’s cash flow, enabling it to continue pushing the dividend higher. 
A healthy income stream
Medical Properties Trust is a healthcare REIT focused on hospital properties. It leases these facilities back to the operator under NNN agreements. That supplies it with steadily rising cash flow to support its 6.3%-yielding dividend.
The REIT has increased that payout for the last nine years. A big growth driver has been its ability to steadily expand its hospital portfolio. Medical Properties currently expects to invest $1 billion to $3 billion on acquisitions this year, which it intends to fund with asset sales and joint venture agreements. This capital recycling strategy will eliminate the need to dilute existing investors by issuing more shares, which should boost its FFO per share, improving the long-term sustainability of its high-yielding dividend. 
Supported by profitable stores
Store Capital is a retail REIT focused on owning freestanding retail properties secured by NNN leases. The company takes a unique approach by focusing on the unit-level profitability of the stores it acquires. Focusing on purchasing profitable locations has enabled the REIT to deliver superior portfolio performance because tenants are willing to continue paying rent on these locations.
Store Capital currently pays a 5.6%-yielding dividend that it has increased at a 6.2% compound annual rate since its initial public offering. The company has an expansive addressable market with an estimated 2 million retail locations it could acquire in the future. Meanwhile, it has a strong balance sheet and solid dividend payout ratio, giving it ample flexibility to continue growing its store count and dividend.
Steady dividend growth
W.P. Carey is a diversified REIT that owns operationally critical properties in the industrial, warehouse, office, retail, and self-storage sectors. It leases these properties back to the operator under a NNN lease. Those leases supply it with stable rental income to support its 5.4%-yielding dividend.
The REIT has increased that payout every year since its initial public offering in 1998. The dividend should continue growing in the future. W.P. Carey has a reasonable dividend payout ratio and a solid balance sheet to fund acquisitions. After buying a record $1.73 billion of properties last year, W.P. Carey expects to acquire $1.5 billion to $2 billion of real estate in 2022. In addition, it’s purchasing a net $2 billion of properties by acquiring a real estate fund it currently manages. These deals will boost its rental income, giving W.P. Carey more cash to grow its dividend.
Great ways to boost your passive income stream
REITs are ideal investments for collecting passive income because they offer above-average dividend yields compared to the broader stock market. However, some REITs stand out from the pack. EPR Properties, Medical Properties Trust, SL Green Realty, Store Capital, and W. P. Carey currently yield more than 5%. Even better, all five REITs should be able to grow those payouts in the future. That makes them great options for investors seeking to boost their ability to generate passive income.
Matthew DiLallo has positions in EPR Properties, Medical Properties Trust, SL Green Realty, and W.P. Carey. The Motley Fool recommends EPR Properties and STORE Capital. The Motley Fool has a disclosure policy. –

Real estate investment trusts (REITs) are a great source of passive income. The average REIT currently offers a dividend yield above 3%, more than double that of the S&P 500

Meanwhile, some REITs offer even higher dividend yields. Five top-quality REITs currently paying more than 5% are ERP Properties (NYSE: EPR)SL Green Realty (NYSE: SLG)Medical Properties Trust (NYSE: MPW)Store Capital (NYSE: STOR), and W.P. Carey (NYSE: WPC).

Image source: Getty Images.

A great income experience

ERP Properties is a specialty REIT focused on experiential real estate like movie theaters and attractions. It leases these properties back to the operator under a triple net lease (NNN). Those rental agreements produce reasonably stable cash flow to support its 6.3%-yielding monthly dividend.

The REIT has a sensible dividend payout ratio of 75% of its adjusted funds from operations (AFFO). Meanwhile, it has a solid investment-grade balance sheet. Those features give it the financial flexibility to purchase more experiential real estate, which should grow its cash flow to support future dividend increases. The REIT has already increased its payout by 10% this year. With it expecting to acquire $500 million to $700 million of properties in 2022, it should have plenty of capacity to grow the dividend in the future. 

Steadily rising to the sky

SL Green Realty is the largest office landlord in Manhattan. It owns some of the top properties in the city, which are in high demand even as more companies move to hybrid workforces in the future. Because of that, rental rates and occupancy levels have held up reasonably well, providing the office REIT with the income to support its 5.3%-yielding monthly dividend.

SL Green recently increased that payout by 2.5%, its 11th straight year of dividend growth. It should be able to continue growing that payout in the future. The REIT recently made its first office acquisition in years, buying 450 Park Avenue for $445 million. Meanwhile, it’s moving forward with its One Madison Avenue development project. SL Green recently secured IBM as an anchor tenant for the property and sold another interest in the $2.3 billion development to a joint venture partner. These investment opportunities, combined with the recovery in the Manhattan office market, should help grow SL Green’s cash flow, enabling it to continue pushing the dividend higher. 

A healthy income stream

Medical Properties Trust is a healthcare REIT focused on hospital properties. It leases these facilities back to the operator under NNN agreements. That supplies it with steadily rising cash flow to support its 6.3%-yielding dividend.

The REIT has increased that payout for the last nine years. A big growth driver has been its ability to steadily expand its hospital portfolio. Medical Properties currently expects to invest $1 billion to $3 billion on acquisitions this year, which it intends to fund with asset sales and joint venture agreements. This capital recycling strategy will eliminate the need to dilute existing investors by issuing more shares, which should boost its FFO per share, improving the long-term sustainability of its high-yielding dividend. 

Supported by profitable stores

Store Capital is a retail REIT focused on owning freestanding retail properties secured by NNN leases. The company takes a unique approach by focusing on the unit-level profitability of the stores it acquires. Focusing on purchasing profitable locations has enabled the REIT to deliver superior portfolio performance because tenants are willing to continue paying rent on these locations.

Store Capital currently pays a 5.6%-yielding dividend that it has increased at a 6.2% compound annual rate since its initial public offering. The company has an expansive addressable market with an estimated 2 million retail locations it could acquire in the future. Meanwhile, it has a strong balance sheet and solid dividend payout ratio, giving it ample flexibility to continue growing its store count and dividend.

Steady dividend growth

W.P. Carey is a diversified REIT that owns operationally critical properties in the industrial, warehouse, office, retail, and self-storage sectors. It leases these properties back to the operator under a NNN lease. Those leases supply it with stable rental income to support its 5.4%-yielding dividend.

The REIT has increased that payout every year since its initial public offering in 1998. The dividend should continue growing in the future. W.P. Carey has a reasonable dividend payout ratio and a solid balance sheet to fund acquisitions. After buying a record $1.73 billion of properties last year, W.P. Carey expects to acquire $1.5 billion to $2 billion of real estate in 2022. In addition, it’s purchasing a net $2 billion of properties by acquiring a real estate fund it currently manages. These deals will boost its rental income, giving W.P. Carey more cash to grow its dividend.

Great ways to boost your passive income stream

REITs are ideal investments for collecting passive income because they offer above-average dividend yields compared to the broader stock market. However, some REITs stand out from the pack. EPR Properties, Medical Properties Trust, SL Green Realty, Store Capital, and W. P. Carey currently yield more than 5%. Even better, all five REITs should be able to grow those payouts in the future. That makes them great options for investors seeking to boost their ability to generate passive income.

Matthew DiLallo has positions in EPR Properties, Medical Properties Trust, SL Green Realty, and W.P. Carey. The Motley Fool recommends EPR Properties and STORE Capital. The Motley Fool has a disclosure policy.

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