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Two REITs to watch with a double-digit dividend yield

Two REITs to watch with a double-digit dividend yield
Dino
Kurbegovic
Updated: 31 May, 2022
3 mins read

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%. 

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. 

GNL  20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

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.

GNL analysts’ price target. Source: TipRanks

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.       

RTL  20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

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. 

RTL analysts’ price target. Source: TipRanks

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. 

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Dino Kurbegovic
Author

Dino is an investor and technology enthusiast with years of experience in managing complex projects. At Finbold he covers stories on stocks, investing, micro and macroeconomic trends. Also, he’s also building a micro solar power plants in his hometown.

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