REITs aren’t always the biggest winners in the market but for those who like to invest and forget, they’re hard to beat. In some ways, they’re about as good a passive income investment vehicle as the public markets offer because they are by law required to pay out 90% of profits in the form of income distributions.And when markets are rocked as they have been recently, the value of cash payouts increases even more than usual.With that in mind here are a couple of REITs that pay high dividends which could likely be held forever.
Easterly Government Properties
If capital preservation is your top priority, Easterly Government Properties (NYSE:DEA) should be near the top of your list.
This REIT focuses on Class A commercial properties developed or leased to the US Government. With such a dependable tenant, cash flows are highly predictable.
The Real Estate Investment Trust pays north of 5% annually and has an occupancy rate of 99% across its almost 90 properties.
For investors, a key contractual provision should not be overlooked. An operating expense provision is in place when inflation turns higher to protect Easterly Government Properties from operating losses.
Medical Properties Trust
Medical Properties Trust specializes in both hospitals and oddly enough casinos. At first glance, those two categories don’t seem to have a whole lot in common. But in today’s inflationary environment, it turns out the combination has worked out very well.
For starters, the occupancy rate is near 100% while rent coverage is around 3% and lease renewal probabilities are extremely high.
The casino and hospital categories both pose high barriers for looming competitors so Medical Properties, for all intents and purposes, has a wide moat around it.
With some negative news coming out recently, it doesn’t come as a surprise that the REIT’s share price has sold off somewhat but that in turn has translated to a very generous yield of 6.2%. Not bad for the 2nd largest non-government hospital owner globally. And make no mistake about it Medical Properties Trust has an international presence with $20 billion in assets spread across Europe and Australia, as well as North America.
With high odds that payments will be paid and over 350% in shareholder returns over the past decade in addition to an AFFO ratio under 80%, MPW is a company you can feel comfortable owning for years to come.