Buying a house can leave you with a loss and a property, which is not in an ideal location to appreciate in value. Yet, buying a real estate investment trust (REIT) can generate double-digit dividend yield and ensure enough diversification.
As the interest in property sector grows, Finbold researched popular REITs and found two yielding over 10%, which could help investors secure income in a turbulent market.
Global Net Leases (NYSE: GNL)
GNL focuses on office and industrial properties with the goal to maintain a high occupancy rate. In the past five years, the company generated sufficient revenue to cover its generous dividend, which on average over this period yielded 10.5%. Currently, the quarterly dividend yields 10.95%, with a high payout ratio of 90%.
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Meanwhile, in its latest earnings, the company reported funds from operations (FFO) at $0.44, which was in line with expectations; however, the revenue was $97.1 million, which represented a miss of $5.46 million. Compared to the same quarter in 2021, net income grew to $5.5 million as compared to a loss of $0.8 million in 2021.
Consequently, shares have been trading in a wide range between $13 and $16, most of the time bouncing between 20-day and 50-day Simple Moving Averages (SMA). Volumes have been constant throughout May with a possibility of a double top forming on the daily chart if the price action continues bouncing between the above-mentioned price levels.
On Wall Street, analysts rate the shares a moderate buy, predicting that in the next 12 months, the average price could reach $18, which would be an increase of 26.14%, from the current trading price of $14.27.
Necessity Retail REIT (NYSE: RTL)
In brief, on February 14, 2022, a REIT formerly known as “American Finance Trust” acquired a $1.3 billion portfolio of open-air shopping centers and changed its name to “Necessity Retail REIT” and started trading under a new ticker symbol.
Meanwhile, the goal for the REIT is to own over 1,000 properties, spanning over 29 million square feet, and earn $382 million in annualized rent. After the acquisition process is completed the REIT will own 90% retail properties and 10% distribution facilities.
Accordingly, the Q1 2022 results showed the company’s revenue increasing by 19.8% year-on-year (YoY) to $94.9 million, beating estimates by $2.76 million. Additionally, the company disposed of six properties for $265 million. The dividend yield at the moment of writing stands at 10.88% and is paid out quarterly.
Shares have been down over 15% year-to-date (YTD), bouncing off of a double bottom on the daily chart more recently. If volumes increase the reversal due to the double bottom could materialize and the shares could breach the 200-day SMA level.
In short, analysts give the shares a moderate buy rating, seeing the average price for the stock in the next 12 months being at $11, which represents an increase of 40.85% from the current trading price of $7.81.
Investing in stocks with high yields tends to be risky for a litany of factors. Those with the right risk appetite can possibly reap the rewards of high yields; however, they need to be ready to pull the plug on signs of bad news surrounding the companies.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
