3 High-Yield REITs For Passive Income

Real Estate Investment Trusts (i.e. REITs) are among the best passive income vehicles due to their income tax exempt status and the requirement that they pass on at least 90% of their taxable income to shareholders. Due to their significantly reduced tax burden combined with the mandated high payout ratio, Real Estate Investment Trusts tend to pay out significantly higher dividend yields than your average stock.

Add to that the fact that their underlying business model typically consists of passively renting out very large and diversified portfolios of commercial real estate, and they are often a reliable source of income. Compared to investing in a single rental property, REITs provide investors with a much more passive, diversified, and liquid alternative for investing in real estate.

The following 3 high-yield REITs offer particularly safe and attractive income for passive real estate investors.

#1. W.P. Carey (WPC)

Perhaps the safest high-yield REIT in the market today, WPC boasts a 23-year dividend growth streak that reveals the consistency and resilience of its business model. Furthermore, while peers saw their cash flow per share plummet in 2020 during the COVID-19 lockdowns, WPC continued to grow theirs while collecting an impressive 96% of their rents in April and May of 2020. As a result, the company easily covered its dividend last year and are expected to maintain a very reasonable 85% payout ratio this year.

Moving forward, as inflation continues to heat up, WPC is particularly well positioned to benefit as 62% of their leases are CPI-linked. Their BBB credit rating, diversification across several real estate sectors, and geographic diversification across North America and Europe gives them access to capital as well as multiple investment opportunities to achieve maximum cap rate/interest rate spreads.

Lastly, W.P. Carey has significant growth momentum, thanks to $900 million in acquisitions already in 2021 at weighted average lease terms of 22 years. As a result, we expect W.P. Carey to continue growing its dividend per share for years to come. Despite these strengths, WPC still yields 5.4% in an environment where long-term interest rates are universally sub-2%.

#2. Medical Properties Trust (MPW)

MPW combines attractive yield with strong growth momentum in a defensive sector to offer investors compelling risk-adjusted income and total return potential. Normalized funds from operation (FFO) per share grew by a whopping 13.5% year-over-year in their first quarter results. The company continued to raise significant equity through at-the-market sales which it recycled into hundreds of millions of dollars of acquisitions.

Thanks to its presence across the United States, Germany, the United Kingdom, Italy, and Australia, MPW has an abundance of opportunities for raising and deploying capital to maximize cost of capital and cap rate spreads. The company also has a strong growth track record as it more than doubled its FFO per share over the past decade while simultaneously paying out and growing its fairly hefty dividend. Last year, the REIT proved its mettle by raising the dividend by nearly 4% and growing FFO per share by 9% in the face of COVID-19 headwinds.

Moving forward, MPW will likely continue leveraging its status as the only pure-play hospital REIT with many years of experience and a broad network of relationships to continue driving deal flow. With a 5.5% yield and a 64% expected payout ratio for 2021, the dividend looks very attractive and safe right now with plenty of room to grow in the years to come.

#3. Simon Property Group (SPG)

SPG is the largest retail REIT and owns a large portfolio of mostly class A malls. While the path for them has been treacherous of late given the explosive growth of e-commerce, countless high-profile retailer bankruptcies, and the COVID-19 lockdowns, SPG continues to generate attractive cash flow for investors.

Their strength derives from their large portfolio of well-located properties, their extensive network of relationships with current and potential tenants, and fortress balance sheet. Their balance sheet gives them significant liquidity and access to cheap debt that they can leverage to redevelop their properties and keep them economically viable. In contrast, many of their retail peers have fallen by the wayside and in some cases even declined into bankruptcy due to having overleveraged balanced sheets that were overwhelmed by bankruptcies and redevelopment needs.

While SPG had to slash its dividend in 2020 due to the uncertainty caused by the COVID-19 lockdowns, it recently raised it by 8% and offers investors an attractive forward yield of 4.3%. With an expected 2021 payout ratio of 57.4% and strong FFO per share growth momentum into 2022 on the back of the re-opening of the economy, the dividend looks very safe and poised to continue significant growth.

While its future remains clouded by the continued momentum towards e-commerce away from bricks-and-mortar retail, SPG has the liquidity, the assets, and the network necessary to weather the storm and emerge as the leading retail landlord of the 21st century. Between mixed-use redevelopments, strategic assets dispositions, and further integration between e-commerce and its increasingly omni-channel properties and tenants, SPG is poised to remain economically viable and a dividend-paying powerhouse for years to come.

Final Thoughts

WPC is a broadly diversified, slow-and-steady, sleep-well-at-night investment that you can count on to gradually grow your dividend income stream over time and weather economic disruptions with ease. MPW is a higher growth, niche investment that – while quite as reliable as WPC – should combine to deliver high total return and income for investors. Lastly, SPG offers investors an attractive contrarian value investment opportunity which, if it plays out well, could offer investors the most upside in both share price appreciation as well as dividend growth.

An equal weighting in all three REITs produces an average dividend yield of 5.1% that is well covered by a diversified stream of cash flows and is expected to grow meaningfully in the years to come. On top of that, WPC, MPW, and SPG each offer investors something different, making them a great place to start building your passive income REIT portfolio.

Samuel is a Professional Engineer and Project Management Professional by training and holds a B.S. in Civil Engineering and Mathematics from the United States Military Academy at West Point. He is a former Army officer, land development project engineer, and a lead investment analyst at Sure Dividend and Vice President at Leonberg Capital

Nothing on this website should be considered financial advice. Investing involves risks which you assume. It is your duty to do your own due diligence. Read all documents and agreements before signing or investing in anything. It is your duty to consult with your own legal, financial and tax advisors regarding any investment.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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