Seeking Alpha
Long/short equity, gold, investment advisor, growth
Profile| Send Message|
( followers)  

Real Estate Investment Trusts, or REITs, are corporations or trusts that use pooled capital of many investors to invest in and manage a portfolio of real estate properties and mortgages. They are traded publicly, just like stocks, and offer the benefits of real estate ownership without directly owning real estate.

To qualify as a REIT, a company must distribute at least 90% of its taxable income to its shareholders each year. (Many pay out 100% of their taxable income.) As REITs deduct the dividends paid to shareholders, they do not have to pay corporate, federal, or state income tax; instead, this responsibility is passed on to the shareholders.

Other REIT requirements include:

  • Structured as a corporation, business trust, or similar association

  • Managed by a board of directors or trustees

  • Offer fully transferable shares

  • Have at least 100 shareholders

  • Pay dividends of at least 90% of the REIT's taxable income

  • Have no more than 50% of its shares held by five or fewer individuals during the last half of each taxable year

  • Hold at least 75% of total investment assets in real estate

  • Have no more than 20% of its assets consist of stocks in taxable REIT subsidiaries

  • Derive at least 75% of gross income from rents or mortgage interest

With the volatility that has plagued our markets in the second half of 2011, I and my clients have found some stability in the often significant dividends offered by REITs. These consistent quarterly, or sometimes monthly dividend payments have proven to be a good hedge against more volatile, aggressive investments.

In this seven-part article we will outline the five top yielding REITs of each type, Residential, Diversified, Retail, Healthcare Facilities, Industrial, Office, and Hotel/Motel.

As we begin, below are the five top yielding Residential REITs, sorted by dividend yield:

1. ARMOUR Residential REIT, Inc. (ARR) offers a 20.69% annual dividend, distributed to investors each month. The next ex-dividend date, the date on which an investor must own the stock to qualify for the dividend, is January 11th, 2012.

The company holds a current market cap of $645.68 million and is trading at $6.96, 2.74% below its 52-week high and 35.19% above its 52-week low. Analyst opinion stands at one strong buy, zero buys, four holds, zero sells, and zero strong sells with a mean target of $7.25.

Click to enlarge:

2. American Capital Agency Corp. (AGNC) offers a 19.99% annual dividend, distributed to investors each quarter. The most recent ex-dividend date was on December 20th, 2011. The next ex-dividend date has not yet been declared but will likely be in late March of next year.

The company holds a current market cap of $5.14 billion and is trading at $28.01, 1.51% below its 52-week high and 40.37% above its 52-week low. Analyst opinion stands at eight strong buys, two buys, four holds, zero sells, and zero strong sells with a mean target of $29.67.

Click to enlarge:

3. Two Harbors Investment Corp. (TWO) offers a 17.19% annual dividend, distributed to investors each quarter. The most recent ex-dividend date was on December 22nd, 2011. The next ex-dividend date has not yet been declared but will likely be in mid-March of next year.

The company holds a current market cap of $1.31 billion and is trading at $9.31, 8.34% below its 52-week high and 25.73% above its 52-week low. Analyst opinion stands at six strong buys, one buy, one hold, zero sells, and zero strong sells with a mean target of $10.89.

Click to enlarge:

4. CYS Investments, Inc. (CYS) offers a 15.19% annual dividend, distributed to investors each quarter. The most recent ex-dividend date was on December 15th, 2011. The next ex-dividend date has not yet been declared but will likely be in early April of next year.

The company holds a current market cap of $1.09 billion and is trading at $13.17, 0.68% below its 52-week high and 30.11% above its 52-week low. Analyst opinion stands at seven strong buys, zero buys, two holds, zero sells, and one strong sell with a mean target of $13.50.

Click to enlarge:

5. New York Mortgage Trust, Inc. (NYMT) offers a 13.68% annual dividend, distributed to investors each quarter. The most recent ex-dividend date was on December 22nd, 2011. The next ex-dividend date has not yet been declared but will likely be in mid-March of next year.

The company holds a current market cap of $68.93 million and is trading at $7.31, 0.42% below its 52-week high and 32.95% above its 52-week low. Analyst opinion stands at three strong buys, zero buys, zero holds, zero sells, and zero strong sells with a mean target of $7.72.

Click to enlarge:

Continued with Part 2: Diversified REITs

Source: 35 Top Yielding Real Estate Investment Trusts, Part 1: Residential REITs