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Can These REITs Keep Paying 9% Dividend Yields?

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With inflation recently soaring over 8%, many income investors would love to acquire dividend stocks that pay out more than 9% annually.

But are high-yielding real estate investment trusts (REITs) also good stocks to own? Many are sharply off their 52-week highs. Are dividend cuts in their future? Here are three monthly dividend-paying REITs with over 9% yields to consider:

Medical Properties Trust Inc. (NYSE: MPW) is a Birmingham, Alabama-based healthcare REIT that owns and operates 438 properties across the U.S., Europe and Australia.

Medical Properties Trust stock pays a monthly dividend of 29 cents. Its most recent quarter produced $1.72 in funds from operations (FFOs) — more than ample to cover 87 cents for three months of dividend payouts.

Raymond James analyst Jonathan Hughes recently maintained a strong buy rating on Medical Properties Trust, while lowering the price target from $20 to $18. That’s well above its recent price near $11.60. The stock has already lost almost 50% of its value since January, pushing the current annual yield up to 9.9%.

The market’s fear is that its largest tenant, Steward Health Care System, may not be able to pay its rent if a prolonged recession occurs. While that could potentially trigger a dividend cut, Medical Properties Trust is well-diversified and should be able to weather that storm. It’s also possible that a potential cut is already baked into the stock price, and should Medical Properties Trust not cut the dividend, the price could rebound.

Gladstone Commercial Corp. (NASDAQ: GOOD) is a diversified net-lease office and industrial REIT that owns and leases 136 properties to 112 tenants. Its occupancy rate was recently over 97%.

Gladstone Commercial pays an annual dividend of 81 cents, yielding 9.5%. Year to date it has lost about 35% of its value. There are no recent analyst ratings.

The FFO of 39 cents in its latest quarterly report is more than enough to cover three months of dividend payments. But like most other office and industrial REITs, a good recent quarter was not enough to support the stock price.

Looking ahead, Gladstone Commercial should be able to maintain its dividend. Its recent acquisition of two commercial properties in Alabama and Florida speaks to its optimism at being able to withstand recessionary difficulties.

EPR Properties (NYSE: EPR) is a diversified experiential REIT that owns and operates 358 movie theater chains, amusement parks, resorts and other recreational venues.

One large negative weighing heavily on EPR Properties’ stock price in September was the announcement that Cineworld Group plc filed for bankruptcy. Cineworld is the parent company of Regal Entertainment Group, which is EPR Properties’ third-largest tenant and the producer of 13.5% of its rental revenue. EPR Properties owns 173 movie theaters and Wall Street’s fear is that in a bad recession other theaters could soon follow Cineworld’s lead.

EPR Properties pays a monthly dividend of $0.275. Second quarter FFO of $1.23 was above analysts’ expectations and well above the $0.825 needed to cover three months of dividend payments. The current annual yield is 9.1%.

Last month, Raymond James analyst Milligan maintained a buy rating on EPR Properties while lowering the target price from $64 to $55. That still represents a 51% upside from its recent price of $36.20. But remember, analysts are not always right.

At the moment it would appear that the dividend is not at risk for a cut. But that could change if more theater chains owned by EPR Properties declare bankruptcy. The stock has shown a bit of resilience in the past few days, but investors may want to wait a bit longer to see whether EPR Properties has truly bottomed.

Related: This Little-Known REIT Has Produced Double-Digit Annual Returns For The Past Five Years

Today’s Private Market Insights:

RAD Diversified’s RAD REIT has declared an 8% dividend yield. The REIT has averaged 27% annual gains since its inception.

QC Capital launched its latest real estate fund with a target annualized return of 15% to 19%

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