Annaly Capital Management (NYSE:NLY), Simon Property Group (NYSE:SPG), Realty Income (NYSE:O) – 3 high-dividend REITs for stable passive income


Equities are more volatile than ever as macroeconomic headwinds build. Recent data showing slowing economic activity in China has raised major concerns about a global economic slowdown, as China is the manufacturing hub of the world. Major US benchmarks are currently down more than 13% year-to-date.

As the Fed prepares to execute another 75 basis point rate hike this month, the housing market should remain strong. Rising federal funds rates are expected to impact mortgage rates, which means interest income for most real estate investment trusts (REITs) is expected to rise in the coming months. This trend should also boost their dividend yields, as REITs are required to distribute at least 90% of their taxable profits to shareholders through dividend payments.

Simon Real Estate Group Inc. GPS

SPG is one of the largest commercial REITs in the United States, operating approximately 199 properties in North America, Europe and Asia. An S&P 100 company, SPG is the largest owner and operator of shopping centers in the United States

With a dividend yield of 6.93%, it is one of the best REITs for generating passive income. Simon Property has an impressive payout ratio of 117.41%. In fact, the REIT increased its quarterly dividend payout by 25 cents or 16.7% year-over-year to $1.75 for the third quarter of fiscal 2022, payable Sept. 30. This follows impressive revenues and profits reported in the last quarter. For the three months ended June 30, SPG’s revenue was $1.28 billion. Operating profit (before other items) improved nearly 4% year-over-year to $626.76 million.

SPG also raised its full-year 2022 guidance, as reported in its latest earnings release, pointing to further potential dividend hikes in the coming quarters.

Realty Income Corp. O

Realty Income is also known as the Monthly Dividend Company® because of its long history of monthly payments. The REIT has increased its dividends 116 times since listing in 1994, earning membership in the S&P 500 Dividend Aristocrats Index. Additionally, Realty Income is a constituent of the S&P 500 Index. The San Diego-based trust currently owns and manages more than 11,400 properties in the United States, Puerto Rico, United Kingdom and Spain.

Realty Income’s total returns have grown at a compound annual growth rate (CAGR) of 15.1% over the past 28 years since its listing on the New York Stock Exchange. Its dividend payouts grew at a CAGR of 4.4% during this period, as the company paid 626 consecutive monthly dividends to its shareholders.

The stock currently pays $2.97 in dividends per year, which translates to a yield of 4.38%. The company’s financial solidity and growth prospects should allow it to maintain its monthly dividend distribution policy over the long term. Realty Income’s occupancy rate was 98.9% as of June 30, 2022, the highest in 10 years. Additionally, the REIT reported a 105.6% recovery rate on release activity last quarter. It currently plans to invest more than $6 billion in fiscal 2022 to expand its global real estate portfolio.

Annaly Capital Management Inc. NLY

With total assets of approximately $82 billion, NLY is a leading player in the residential mortgage financing market. The REIT invests primarily in mortgage-backed securities. Although Annaly’s book value declined slightly sequentially due to macroeconomic headwinds, the REIT’s earnings remained strong. Its net income for the six months ended June 30, 2022 nearly doubled year-over-year to $2.89 billion.

Commenting on this, David Finkelstein, CEO and President of Annaly, said: “These [macroeconomic] The pressures weighed on our book value, although our portfolio again generated earnings above our dividend. Despite these challenges, we remain constructive on the outlook for agency MBS, given new historically attractive investment returns and increased clarity from the Federal Reserve on the path forward for interest rate hikes and quantitative tightening. .

The stock pays $0.88 in annual dividends, which works out to an impressive 13.48%. In fact, NLY has one of the highest annual dividend yields among its peers.

Analysts expect Annaly’s revenue to grow 34.80% year-over-year to $638.80 million in the third fiscal quarter (ending September). This increase should also boost NLY’s dividend payouts in the coming quarters.

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