These real estate investment trusts (REITs) yield 4% or more, some offering exceptional double-digit growth. Acquire them, hold on, and reinvest the dividends.
Real estate is a timeless asset class, holding value across generations.
However, most retail investors lack the connections, expertise, and financial resources needed to invest in commercial properties. This is where real estate investment trusts (REITs) come into play. These publicly traded entities purchase and lease real estate, distributing at least 90% of their taxable income to shareholders in the form of nonqualified dividends.
This makes REITs excellent options for dividend-focused investors. Below are three top-tier REITs from different real estate segments. Their robust financials, consistent dividend history, and compelling valuations present them as the ideal choices for investing $1,000 today.
1. Realty Income
Known as the “monthly dividend company,” Realty Income (O -0.46%) pays dividends monthly, unlike most companies that distribute quarterly. Realty Income manages a portfolio exceeding 15,000 properties throughout the U.S. and Europe, focusing on net leases for single-tenant retail businesses like restaurants, gyms, and pharmacies.
Although high interest rates have recently impacted Realty Income’s stock, driving its dividend yield to around 5.5%, the dividend payout ratio is a manageable 76% of the projected 2024 funds from operations (FFO). The company has consistently increased dividends for 32 years.
2. Rexford Industrial Realty
With California hosting one of the largest economies globally, Rexford Industrial Realty (REXR -1.87%) maintains a substantial portfolio of over 400 industrial properties in Southern California. These properties support various industries including manufacturing and distribution.
Rexford’s current dividend yield of 5.3% is its highest to date. While unusually high yields can be concerning, this one appears more like an opportunity due to Rexford’s 73% payout ratio, which comfortably covers the dividend. The company has a successful history of annual dividend increases since its IPO in 2014, including through the pandemic.
3. Prologis
E-commerce represents a major growth trend in the economy, and Prologis (PLD -1.00%) is positioned to benefit from it. The company develops, leases, and manages properties for logistics and supply chain purposes, with key tenants like Amazon and Home Depot. Its properties are ideally situated near major transportation hubs, facilitating significant movement of goods.
Prologis has a strong initial dividend yield of 4% and has increased its FFO by 12% annually over the past five years. With a modest payout ratio of 72% for 2024 FFO and an “A” credit rating from S&P Global, this REIT offers robust financial stability. While not trading at a bargain price of over 18 times FFO, it remains a sound investment given its potential for durable growth.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is on The Motley Fool’s board of directors. Justin Pope holds no positions in the mentioned stocks. The Motley Fool recommends Amazon, FedEx, Home Depot, Prologis, Realty Income, and S&P Global. The Motley Fool suggests long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.
