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February 20, 2019

9 Stocks with Dividend Yields Over 4% in a Sector That Often Beats the Broader Market

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REITs outperformed the S&P 500 last year and so far in 2019

Real estate investment trusts, or REITs, are usually considered income investments, so some investors panic and sell them when interest rates are rising. But the Federal Reserve’s recent change in policy should put that fear to rest.

Meanwhile, you can see that REITs have performed very well compared to the broader stock market in the long run. We list S&P 500 REITs, sorted by yield, below.

We pointed out in August that a knee-jerk reaction to avoid REITs when interest rates are rising isn’t supported by performance. A rising-rate environment is typically one that also features significant economic growth, which means a REITs’ rental income and earnings will rise. This tends to offset negative price action from rising rates.

The Fed’s recent change in direction may have eliminated the usual fear of interest-rate increases, at least for now.

And the silver lining is that REITs as a group have measured up well against the broader stock market over long periods. Here’s how the S&P 500 REIT industry group’s total returns (with reinvested dividends) have compared to the entire S&P 500 SPX over various periods. First, we’ll show total returns and then average annual returns.

Total returns through Feb. 15, except as indicated:

S&P 500 REITs S&P 500
2019 12.7% 11.0%
2018 -2.1% -4.4%
2 years 20.3% 22.9%
3 years 42.3% 58.3%
5 years 61.8% 67.3%
10 years 388.2% 314.5%
15 years 275.6% 230.2%
Source: FactSet

You can see that the 10-year figures are distorted because in early 2009, we were close to the market bottom that followed the deep declines experienced during the credit crisis.

It might be more useful to compare average annual total returns over long periods:

S&P 500 REITs S&P 500
2 years 9.7% 10.9%
3 years 12.3% 16.5%
5 years 10.1% 10.8%
10 years 18.4% 15.3%
15 years 9.2% 8.3%
Source: FactSet

The 15-year figures are particularly interesting. Despite the 2008-2009 crisis, the REITs have performed better than the S&P 500, even though the full index is so heavily weighted to large tech stocks, such as Facebook FB, Apple AAPL,  Amazon AMZN,  Netflix NFLX, and Google holding company Alphabet GOOG, GOOGL.

S&P 500 REITs: yields and returns

While we have compared total returns with dividends reinvested, you won’t be reinvesting if you are buying REIT shares for income.

It is very important to consider your investment objective. Even if you are not investing in REITs for income, they can help you diversify your portfolio. You should also consider a REIT’s particular specialty and growth prospects when deciding whether to invest.

Here are all 32 REITs in the S&P 500, sorted by dividend yield:

Real estate investment trust Ticker Primary investing activity Dividend yield – current Average total return – 15 years
Iron Mountain Inc. IRM Document and data storage facilities 6.96% 8.6%
Macerich Co. MAC Commercial properties 6.87% 4.6%
Kimco Realty Corp. KIM Shopping centers 6.31% 2.9%
Weyerhaeuser Co. WY Timberland 5.32% 3.7%
Ventas Inc. VTM Senior housing and health care properties 4.86% 12.4%
HCP Inc. HCP Senior housing and health care properties 4.80% 7.2%
Welltower Inc. WELL Senior housing and health care properties 4.48% 11.3%
Simon Property Group Inc. SPG Shopping malls 4.36% 13.2%
Host Hotels & Resorts Inc. HST Hotels 4.29% 5.8%
Realty Income Corp. O Diverse commercial properties 3.86% 14.2%
Public Storage PSA Self-storage facilities 3.85% 13.8%
Vornado Realty Trust VNO Office buildings in New York, Chicago and San Francisco 3.84% 7.3%
Crown Castle International Corp CCI Cellular towers 3.75% 17.9%
SL Green Realty Corp. SLG Commercial properties in Manhattan, New York 3.71% 7.9%
Mid-America Apartment Communities Inc. MAA Apartment communities 3.69% 12.5%
Regency Centers Corp. REG Shopping centers 3.53% 7.4%
Digital Realty Trust Inc. DLR Data centers 3.51% N/A
Extra Space Storage Inc. EXR Self-storage facilities 3.45% N/A
Apartment Investment and Management Co. Class A AIV Apartment communities 3.14% 9.9%
AvalonBay Communities Inc. AVB Apartment communities 3.10% 13.6%
Federal Realty Investment Trust FRT Retail properties 3.01% 11.7%
Equity Residential EQR Rental apartment properties 2.95% 11.7%
UDR Inc. UDR Multifamily residential properties 2.89% 11.3%
Duke Realty Corp. DRE Industrial properties 2.89% 5.1%
Alexandria Real Estate Equities Inc. ARE Life sciences and technology office campuses 2.88% 8.9%
Boston Properties Inc. BXP Office properties 2.84% 11.2%
Prologis Inc. PLD Logistics and distribution facilities 2.70% 8.6%
Essex Property Trust Inc. ESS Multifamily residential properties 2.67% 14.4%
Equinix Inc. EQIX Data centers 2.34% 20.6%
American Tower Corp. AMT Communications infrastructure 1.89% 20.7%
CBRE Group Inc. Class A CBRE Services to the commercial real-estate industry 0.00% N/A
SBA Communications Corp. Class A SBAC Wireless communications infrastructure 0.00% 29.3%
 Source: FactSet

So a high dividend yield can be a very good thing if income is your objective. But as you can see, the best 15-year performer on the — SBA Communications Corp. SBAC  — doesn’t even pay a dividend.

Article and media were originally published by Philip van Doorn at