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10 REITs with the best tracks records for high dividend yields

They have plenty of money to pay out big income streams

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Half of the real estate investment trusts listed below invest in health-care properties.

The Real Estate Investment Trust subsector of the S&P Composite 1500 has been a big performer this year. REITs have returned 14%, almost three times that of the index.

It’s taken considerably longer than some investors expected for the Federal Reserve to raise the short-term federal funds rate, which has been locked in a range of zero to 0.25% since late 2008.

The current consensus is that the Fed will finally allow rates to rise in the middle of 2015. That will put pressure on prices for all types of income-producing investments, including REITs. That’s because yields of existing fixed-income securities will match those of new issues.

Mortgage REITs, which primarily invest in agency mortgage-backed securities, will be especially sensitive, because the market values of their investments will fall. Equity REITs, which purchase, develop, manage and sell commercial and multifamily properties, may be less sensitive to the interest-rate increases because the market values of their investments may rise.

In the first part of this series, we discussed investors’ motivation for buying stocks with high dividend yields. If income is the objective, and the companies are otherwise healthy and easily covering their dividends with cash flow, the dividends should continue to flow, even if share prices drop following a rate increase.

For well-managed equity REITs, investors can also look forward to continued growth, as property prices rise or as the companies continue to make new investments.

Here’s a list of the highest-yielding equity REITs included in the S&P 1500 as of Friday’s market close. Once again, we have taken the conservative step of limiting the group to companies that have declared dividends for at least five years and have not lowered their regular dividends for the past four full years.

10 highest-yielding S&P 1500 REITs
Equity REITTickerClosing price - Oct. 3DividendDividend frequencyAnnual dividendYield
Government Properties Income TrustGOV,-0.31%$21.94$0.430Quarterly$1.727.84%
Senior Housing Properties TrustSNH,-0.14%$20.94$0.390Quarterly$1.567.45%
Hospitality Properties TrustHPT,-0.91%$26.86$0.490Quarterly$1.967.30%
EPR PropertiesEPR,-0.80%$50.78$0.285Monthly$3.426.73%
Medical Properties Trust Inc.MPW,-0.31%$12.50$0.210Quarterly$0.846.72%
Franklin Street Properties Corp.FSP,-2.38%$11.41$0.190Quarterly$0.766.66%
Universal Health Realty Income TrustUHT,-0.43%$42.23$0.630Quarterly$2.525.97%
Omega Healthcare Investors Inc.OHI,+0.50%$34.65$0.510Quarterly$2.045.89%
Liberty Property TrustLPT,-0.69%$33.24$0.475Quarterly$1.905.72%
LTC Properties Inc.LTC,-0.29%$37.38$0.170Monthly$2.045.46%
Source: FactSet

Here’s how these REITs have performed on a total return basis, with dividends reinvested. While many REIT investors don’t reinvest, because they want income, we’re using total returns for easier comparison to the S&P 1500 Index:

Total returns
Equity REITTickerTotal return - YTDTotal return - 3 yearsTotal return - 5 yearsTotal return - 10 years
Government Properties Income TrustGOV-8%28%29%N/A
Senior Housing Properties TrustSNH-1%22%53%129%
Hospitality Properties TrustHPT4%62%82%41%
EPR PropertiesEPR9%65%109%163%
Medical Properties Trust Inc.MPW8%75%126%N/A
Franklin Street Properties Corp.FSP0%26%22%N/A
Universal Health Realty Income TrustUHT11%53%81%163%
Omega Healthcare Investors Inc.OHI23%172%229%542%
Liberty Property TrustLPT1%39%38%52%
LTC Properties Inc.LTC10%73%107%277%
S&P Composite 1500 Index5%78%104%115%
Source: FactSet

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