Top 15 Dividend Paying REITs

Many income investors have looked to REITs (Real Estate Investment Trusts) as a source of dividends. REITs are pass-through entities and to qualify for this status, they must pay dividends equal to 90% or more of their taxable income. Because many REITs are now trading far below their 2007 highs, their yields appear very attractive. For example, National Retail Properties (NNN) currently pays a 6.6% dividend, while Realty Income Corporation (O) is paying 6.1% (the author is long O).

Since many of these companies were started after The Tax Reform Act of 1986, you won’t find them on S&P’s list of Dividend Aristocrats, which requires 25 consecutive years of increasing dividends. But there are some great dividend-paying REITs out there. Before you dive in, though, you might want to check whether or not the company has a policy of growing its dividend. If your dividends don’t grow at or above the rate of inflation, and you plan to hold the shares indefinitely (as an income investor) you may be losing ground financially.

Recently, the March adjusted CPI number was released. It indicated an annualized inflation rate of 3.6%. If this rate remains constant over the next decade, your dividends would have to grow in excess of 42% to stay ahead of the CPI. Not all REITs have exceeded this growth rate when it comes to dividends.

With this in mind, I set out to compile a list of REITs with the top dividend growth rates. I began with a list of 130 or so companies, and then eliminated those that have not paid dividends continuously for the last 10 years. The results were interesting: many of the companies with the highest dividend growth also had the best share price appreciation.

Based on my research, here are the top 15 dividend-growing REITs over the last 10 years: 

Disclosure: The author is long Realty Income Corporation (O).

Comments

[Earl Asbury]

What's wrong with the healthcare REITs?

[Les Mitchell]

You might take a look at SNH & HCN for healthcare REIT choices. Also O for good old consistant income.

[stc1]

This article needs a bit more homework. GTY and RYN weren't REITs for the entirety of your timeframe, so their dividend growth is skewed upward by their REIT conversion. PEI's div growth doesn't reflect the fact that the company foundered through most of the 90's and had to cut its dividend and restructure through a backdoor UPREIT (in 1997) before starting to grow again. PSA's div growth is skewed by some of its formation transactions.

[stc1]

Also, I'm fairly certain your calc's for EPR, ARE, AMB and SLG are wrong, as their div's haven't grown by those percentages. All four came public in 1997, so I'm guessing you used their partial div's for the year for your base to calc div growth. AIV is also wrong; I don't know where your numbers are coming from. But hey, I tentatively think that the remaining five might be right! Just follow this simple rule: GGP should always come out #1 in historical dividend growth among REITs. If you get another result, your looking at the wrong info.

Long ARE, EPR, GGP & O

[AmesTiedeman]

The performance of the 15 above is impressive. Will the future be so bright?

[HarMegiddo]

you gotta go with the mortgage reits. CMO is tops!

[reff55]

CMO prefered is paying $1.26. 10% yield.

[guliamo]

Rayonier is a timberland company that owns 10's of thousands of would land acres. They chop down a few acres, then move to the next in a cycle that allows re-growth. No need to explain how important wood is to many aspects of our life but wood is also good as an investment and a great hedge against a volatile market. If Rayonier doesn't like the current price it's offered for it's wood, it simply doesn't have to chop any - the inventory keeps growing, literally, on the tree - so no warehousing costs and no depreciation. Since the housing slowdown, RYN has been beaten up with the rest of the field, but not for a good reason. So if you are looking for a great way to play it solid and get a 4.6% dividend while you're doing it, Rayonier is the play for you.

[tagthatstock]

the reit divy play is getting pretty old and risky when you consider the magic math needed to justify the huge debts...... if youre gonna play with high risk,,,,,,,,,DHY @ $3.50 paying 11% is a less risky play. been kicking old and stagnant DVY's butt since $70

[DividendGrowthInvestor]

Those are some pretty good stocks out there for which I have never heard anything yet.

stc1,

Nobody would take your comments seriously unless you provide some hard data evidence that David Powell's calculation data is wrong. You might be correct, but please next time you criticize something, please have your backup ready.

Guliamo,

What you are saying about RYN is generally correct. It doesn't have to chop down trees if it doesn't like the price. But how else is the company going to be able to generate the cashflow to pay dividends to shareholders?