5 REIT Stocks With Generous Dividends to Consider After Q3 Earnings

Rising interest rate concerns have pressured real estate investment trusts (REITs), creating potential buying opportunities for income-focused investors.

Although higher borrowing costs remain a headwind, several REITs have demonstrated resilience through solid third-quarter results, improving operating fundamentals, and attractive dividend yields.

With some REIT stocks trading at discounted valuations while others have held up remarkably well, investors have opportunities to pursue both income and potential capital appreciation.

Recent earnings also suggest that several REITs have sufficient cash flow to support their dividends, although payout coverage varies.

That said, here are five REIT stocks worth considering after reporting favorable Q3 results this week.

Starwood Property Trust – STWD

Zacks Rank #1 (Strong Buy) | Stock Price: $12 | Dividend Yield: 14.9%

Specializing in commercial real estate lending and property investments, Starwood Property Trust STWD) offers an appealing buy-the-dip opportunity after its recent selloff to a 52-week low of $11 a share.

Starwood reported Q3 distributable earnings of $0.29 per share, while investing $3.2 billion during the quarter. Most intriguing was that Starwood originated $2.4 billion in commercial real estate loans, bringing its lending portfolio to a record $17.8 billion and expanding its potential to generate recurring interest income.

Optimistically, the company maintained its $0.48 quarterly dividend, although its unusually high yield comes with elevated risk.

Simon Property Group – SPG

Zacks Rank #3 (Hold) | Stock Price: $228 | Dividend Yield: 3.9%

One of the world's largest shopping mall and premium outlet operators, Simon Property Group SPG) stock has held up relatively well despite broader REIT weakness.

Simon's Q3 real estate funds from operations (FFO) increased roughly 5% to $3.37 per share, with occupancy reaching 96.5% and domestic property net operating income (NOI) rising over 6%.

Encouragingly, Simon raised its full-year FFO guidance and increased its quarterly dividend by 2% to $2.30 per share, supporting its appeal as an established income investment.

RLJ Lodging Trust – RLJ

Zacks Rank #2 (Buy) | Stock Price: $12 | Dividend Yield: 4.8%

Focused on premium-branded hotels in major U.S. markets, RLJ Lodging Trust RLJ) offers investors affordable exposure to the hospitality sector.

RLJ's Q3 adjusted FFO surged 26% to $0.34 per share, supported by a nearly 10% increase in revenue per available room (RevPAR). Management also raised its full-year outlook, projecting adjusted FFO of $1.47-$1.51 per share.

With RLJ stock trading near a 52-week peak and holding up amid recent interest rate concerns, its $0.15 quarterly dividend adds to the income appeal. Plus, a payout ratio of under 50% suggests there may be room for future dividend hikes.

CareTrust REIT – CTRE

Zacks Rank #2 (Buy) | Stock Price: $38 | Dividend Yield: 4.2%

CareTrust REIT CTRE) invests in skilled nursing facilities, senior housing, and other healthcare properties, benefiting from long-term demand for senior care.

Q3 normalized FFO jumped 20% to $0.54 per share, supported by $739.5 million in new investment activity. Management also raised its full-year FFO guidance, reflecting continued portfolio expansion.

CareTrust's $0.39 quarterly dividend appears well supported, and shares have rebounded sharply after its favorable Q3 report.

NNN REIT – NNN

Zacks Rank #3 (Hold) | Stock Price: $41 | Dividend Yield: 5.9%

NNN REIT NNN) owns retail properties leased to tenants under long-term net lease agreements, providing predictable rental income.

Third-quarter adjusted FFO increased nearly 6% to $0.91 per share, while portfolio occupancy reached an impressive 99.2%. The company also maintained ample liquidity of approximately $1.4 billion.

With decades of consecutive annual dividend increases and a quarterly payout of $0.62 per share, NNN remains an appealing option for dependable income.

Bottom Line

Despite interest rate uncertainty, these five REITs offer attractive dividend income backed by varying degrees of operating strength.

Starwood Property Trust and RLJ Lodging Trust stand out for their attractive valuations, with both stocks trading under $15 a share and near 8X forward earnings, offering potential upside alongside their generous dividend yields.

Meanwhile, Simon Property Group, CareTrust REIT, and NNN REIT offer additional opportunities for those seeking diversified real estate income.

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This article originally published on Zacks Investment Research (zacks.com).

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