Published July 4th, 2017
Real estate investment trusts – or REITs, for short – can be fantastic securities for generating meaningful portfolio income.
The following downloadable REIT list contains a comprehensive list of U.S. real estate investment trusts along with metrics that matter, including:
- Stock price
- Dividend yield
- Market capitalization
- 5-year beta
How To Use The REIT List To Find Dividend Stock Ideas
REITs give investors the ability to experience the economic benefits associated with real estate ownership without the hassle of being a landlord in the traditional sense.
Because of the monthly rental cashflows generated by REITs, these securities are well-suited to investors that aim to generate income from their investment portfolios. Accordingly, dividend yield will be the primary metric of interest for many REIT investors.
For those unfamiliar with Microsoft Excel, the following images show how to filter for REITs with dividend yields between 5% and 7% using the ‘filter’ function of Excel.
Step 1: Download the Complete REIT Excel Spreadsheet List at the link above.
Step 2: Click on the filter icon at the top of the ‘Dividend Yield’ column in the Complete REIT Excel Spreadsheet List.
Step 3: Use the filter functions ‘Greater Than or Equal To’ and ‘Less Than or Equal To’ along with the numbers 0.05 ad 0.07 to display REITs with dividend yields between 5% and 7%.
This will help to eliminate any REITs with exceptionally high (and perhaps unsustainable) dividend yields.
Also, click on ‘Descending’ at the top of the filter window to list the REITs with the highest dividend yields at the top of the spreadsheet.
Now that you have the tools to identify high-quality REITs, the next section will show some of the benefits of owning this asset class in a diversified investment portfolio.
Why Invest in REITs
REITs are, by design, a fantastic asset class for investors looking to generate income.
Thus, one of the primarily benefits of investing in these securities is their high dividend yields.
The currently high dividend yields of REITs is not an isolated occurrence. In fact, this asset class has traded at a higher dividend yield than the S&P 500 for decades.
This trend is shown below.
The high dividend yields of REITs are due to the regulatory implications of doing business as a real estate investment trust.
In exchange for listing as a REIT, these trusts must pay out at least 90% of their net income as dividend payments to their unitholders (REITs trade as units, not shares).
Sometimes you will see a payout ratio of less than 90% for a REIT, and that is likely because they are using funds from operations, not net income, in the denominator for REIT payout ratios (more on that later).
One might think that the high payout ratios of REITs would result in inferior total return performance compared to their peers (even though they have high dividend yields).
This is not the case.
In fact, REITs, through the 20-year period ending in 2016, REITS – as measured by the MSCI U.S. REIT Index – actually outperformed the broader stock market as measured by the S&P 500 Index.
REIT Financial Metrics
REITs run unique business models.
More than the vast majority of other business types, they are primarily involved in the ownership of long-lived assets.
From an accounting perspective, this means that REITs incur significant non-cash depreciation and amortization expenses.
How does this effect the bottom line of REITs?
Depreciation and amortization expenses reduce a company’s net income, which means that sometimes a REIT’s dividend will be higher than its net income, even though its dividends are safe based on its cash flow.
To give a better sense of financial performance and dividend safety, REITs eventually developed the financial metric funds from operations, or FFO. Just like earnings, FFO can be reported on a per-unit basis, giving FFO/unit – the rough equivalent of earnings-per-share for a REIT.
FFO is determined by taking net income and adding back various non-cash charges that are seen to artificially impair a REIT’s perceived ability to pay its dividend.
For an example of how FFO is calculated, consider the following net income-FFO reconciliation from a recent earnings release of Realty Income (O), one of the largest and most popular REIT securities.
In this quarter, Realty Income’s net income per unit was $0.27 and adjusted FFO per unit was $0.76, a difference of ~181%. This shows the profound effect that depreciation and amortization can have on the GAAP financial performance of real estate investment trusts.
The Complete REIT Spreadsheet List contains a list of all publicly-traded real estate investment trusts.
However, this database is certainly not the only place to find high-quality dividend stocks trading at fair or better prices.
In fact, one of the best methods to find high-quality dividend stocks is looking for stocks with long histories of steadily rising dividend payments. Companies that have increased their payouts through many market cycles are highly likely to continue doing so for a long time to come.
You can see more high-quality dividend stocks in the following Sure Dividend databases, each based on long streaks of steadily rising dividend payments:
- The 2017 Dividend Kings List: Dividend Stocks With 50+ Years of Rising Dividends
- The 2017 Dividend Aristocrats List: 25+ Years of Rising Dividends
- The 2017 List of All 264 Dividend Achievers
Alternatively, another great place to look for high-quality business is inside the portfolios of highly successful investors. By analyzing the portfolios of legendary investors running multi-billion dollar investment portfolios, we are able to indirectly benefit from their million-dollar research budgets and personal investing expertise.
To that end, Sure Dividend has created the following stock databases:
- Warren Buffett’s Top 20 Stocks
- Seth Klarman’s Top 5 High Dividend Stocks
- Joel Greenblatt’s Top 20 High Dividend Stocks
- Bill Gates’ Stock Portfolio: Every Holding Analyzed
- Prem Watsa’s Dividend Stock Portfolio: Every Holding Analyzed
You might also be looking to create a highly customized dividend income stream to pay for life’s expenses.
The following two lists provide useful information on high dividend stocks and stocks that pay monthly dividends: