Investors looking for high-dividend yields often turn to real estate investment trusts, or REITs. REITs exist virtually entirely to generate income that is then substantially completely returned to shareholders via dividends.

In this way, REITs can be an excellent way to generate passive streams of income.

In this article, we’ll look at three high-yield REITs that we like for their very strong current dividend yields.

STAG Industrial (STAG)

STAG Industrial is an owner and operator of industrial real estate. It is focused on single-tenant industrial properties and has ~563 buildings across 41 states in the United States. The focus of this REIT on single-tenant properties might create higher risk compared to multi-tenant properties, as the former are either fully occupied or completely vacant. However, STAG Industrial executes a deep quantitative and qualitative analysis on its tenants.

As a result, it has incurred credit losses that have been less than 0.1% of its revenues since its IPO. As per the latest data, 53% of the tenants are publicly rated and 31% of the tenants are rated “investment grade.” The company typically does business with established tenants to reduce risk.

In mid-February, STAG Industrial reported (2/13/24) financial results for the fourth quarter of fiscal 2023. Core FFO per share grew 5.5% over the prior year’s quarter, from $0.55 to $0.58, exceeding the analysts’ consensus by $0.01, thanks to the sustained strength of the REIT’s tenants and material hikes in rent rates. Net operating income grew 10% over the prior year’s quarter while the occupancy rate climbed sequentially from 97.6% to 98.2%.

STAG Industrial has a well-laddered lease maturity schedule, with a weighted average lease term of 4.9 years and about half of the leases maturing after the end of 2025. Thus, the cash flows of the REIT can be considered fairly reliable under normal business conditions.

STAG has increased its dividend for 12 consecutive years. STAG Industrial currently offers a 4.2% yield and has never cut its dividend throughout its short history.

SL Green Realty (SLG)

SL Green Realty Corp. (SLG) was formed in 1980. It is an integrated real estate investment trust (REIT) that is focused on acquiring, managing, and maximizing the value of Manhattan commercial properties. It is Manhattan’s largest office landlord, and currently owns 60 buildings totaling 33 million square feet.

In late January, SLG reported (1/24/2024) financial results for the fourth quarter of fiscal 2023. Its same-store net operating income grew 3.9% over the prior year’s quarter and its occupancy rate edged up sequentially from 89.9% to 90.0%.

SLG benefits from long-term growth in rental rates in one of the most popular commercial areas in the world, Manhattan. The REIT pursues growth by acquiring attractive properties and raising rental rates in its existing properties. It also signs multi-year contracts (7-15 years) with its tenants in order to secure reliable cash flows. SLG has grown its funds from operations per share at a 3.0% average annual rate in the last decade.

SLG can maintain its attractive 6.5% dividend, which is well covered by cash flows, with a healthy payout ratio of 50%. SLG is thus suitable for income-oriented investors who can wait patiently for the recovery of the REIT from the pandemic. SLG stock yields 7%.

Crown Castle International (CCI)

Crown Castle International is a powerhouse in the data infrastructure business. It is structured as a real estate investment trust, or REIT, and operates cell phone towers with small cells where larger towers are not feasible, and fiber connections for data transmission. The trust owns, operates and leases more than 40,000 cell towers and 80,000 route miles of fiber across every major US market, helping it to support data infrastructure across the country.

Crown Castle posted fourth quarter and full-year earnings on January 24th, 2024, and results were better than expected on both the top and bottom lines. Funds-from-operations came to $1.82, which was eight cents better than expected. It was also up from $1.77 in the third quarter. Revenue was $1.67 billion, down 5.1% year-over-year, but slightly ahead of estimates. Site rental revenue was $1.6 billion, up from $1.58 billion in Q4 of last year. The company reiterated its guidance for 2024, with adjusted FFO set to be near $6.90.

The trust’s robust cash flow generation will afford it the opportunity to continue to pay the ample dividend. The current payout ratio is 91% of FFO. We forecast continued relatively modest increases in the payout, around that of FFO growth, and we believe the payout is safe. CCI stock yields 5.8%.

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Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.