Most folks know that one of the best ways to generate investment income is with real estate.
However, buying a property is not possible for most investors because of the high upfront costs and post-purchase chores.
Thankfully, there's a special class of publicly traded investments that offer significant yield without those drawbacks: real estate investment trusts.
REITs by law have to deliver 90 percent of taxable income back to shareholders.
Here are nine high-yield REITs to invest for income without the headache.
VEREIT is a full-service real estate firm that owns and operates single-tenant commercial properties in the U.S. Its top tenants include restaurants like Red Lobster, retailers like Walgreens (WBA) and grocery stores like Albertsons across roughly 4,000 properties. Single-tenant properties can be a bit more risky than a big office building, since if your customer leaves or experiences financial hardship, then your entire facility fails to generate any rent. However, the high-quality tenants with big name recognition and deep corporate pockets provide a degree of stability to VER stock.
New York-based W.P. Carey is one of the largest REITs, with a market capitalization of about $13 billion at present. Its portfolio of commercial real estate spans about 1,160 properties structured as net-lease investments, in which the tenant is responsible for property taxes, insurance and maintenance costs. That means WPC is free from many of the other headaches of property ownership. W.P. Carey, like many of the largest REITs, has seen some headwinds as interest rates have moved higher and stifled plans for borrowing on new projects – and subsequently, its growth plans. However, the existing portfolio is substantial, and throws of a great yield at current prices.
Billing itself as an "experiential real estate investment trust," VICI is a company that focuses on entertainment and tourism properties around the U.S. These include gaming facilities and restaurants, chief among them the famous Caesars Palace Las Vegas Hotel & Casino. All told, VICI Properties boasts about 39 million square feet of real estate, including nearly 15,000 hotel rooms and roughly 150 restaurants, bars and nightclubs. There is a bit of exposure here for tenants, since in a rough economic environment revenue may ebb. However, VICI doesn't have to worry about overall profit margins and instead gets reliable rent checks from Caesars and others to create a hefty quarterly payday.
Medical Properties Trust
Boasting a slightly different flavor than your typical REIT is Medical Properties Trust. As the name implies, MPW is a health care-oriented real estate company that ranges from rehabilitation centers to regional hospitals. The $7 billion Alabama-based company has extensive operations around the world thanks to an aggressive acquisition strategy. Most recently, MPW acquired an Australian hospital portfolio in early 2019 for $859 million in addition to an existing investment in Germany. This is truly a global player in health care real estate, adding an extra layer of diversification to lower the risk for long-term investors.
Sabra Healthcare REIT
Another great play on health care real estate are senior housing facilities. One of the only sure things in life (if you're lucky!) is that we all grow old and need care in our golden years, and Sabra's portfolio of nearly 500 properties include skilled nursing centers and senior housing communities. A bit smaller than some of the other REITs on this list, Sabra is still substantial at more than $3 billion in market cap. And of course, the changing demographics in the U.S. leading to a generally older population is sure to create a tailwind for this company and continue to fuel reliable dividends.
Kimco Realty Corp.
Not to be confused with traditional mall operators, Kimco is a real estate investment trust that focuses on open-air shopping centers that include the less glamorous properties like your local strip mall as well as upscale town center designs meant to evoke a Main Street feel. KIM has invested in nearly 440 U.S. shopping centers for a total of 76 million square feet of leasable space from New Jersey, California to Texas. The company has also operated for more than 60 years, which should give investors confidence this stock has the pedigree and diversification to last for decades to come.
MGM Growth Properties
If you recognize the name, you won't be surprised that MGM Growth Properties is one of the biggest names in casino gaming, convention centers and hotels. This roughly $9 billion REIT owns 11 elite properties, including The Park Vegas, Hard Rocks in Ohio and the Empire Resorts in New York. MGP resorts comprise about 27,500 hotel rooms, 300 eateries and 150 retail outlets. Structured as a REIT, the company is incredibly focused on shareholder value with a strong history of dividend payments. After hitting the stock market in 2016, MGP initially paid a dividend of 26 cents a quarter and last year topped 44 cents.
New Residential Investment
Perhaps one of the riskiest REITs on this list. New Residential doesn't own properties. Instead, it focuses on investing mortgages and makes its money though the servicing and origination of loans. NRZ borrows money before extending loans to others and depends on low interest rates to achieve the most efficient access to capital. When rates rise, not only will New Residential risk margin pressure, but it also may see problems in the underlying lending market as mortgages become more expensive, too. Still, the yield is so amazing that income investors not afraid of a little risk may want to give NRZ a look.
Brookfield Property REIT
If you can't make up your mind on individual flavors of real estate, then BPR may be the remedy. In addition to a strong history of dividends, this REIT is one of the most diversified single-stock investments in the sector. A commercial real estate operator with total assets of nearly $90 billion, Brookfield manages a varied portfolio of premier office space, student dormitories, self-storage centers and other properties. The company's stated mission is to invest in "high-quality assets in resilient and dynamic markets and pursuing diversification across both geographic areas and real estate sectors," which it has done quite successfully in recent years.