Top 8 REITs for HUGE DIVIDENDS (Retire Early with Passive Income)
Summary
TLDRThis video offers an in-depth exploration of the best REITs for passive income investment. The host presents a list of top eight REITs, including Getty Realty Group and American Tower Corporation, highlighting their market caps, dividend yields, and growth rates. The video also discusses the pros and cons of investing in REITs, such as steady dividends, high returns, and liquidity, versus potential illiquidity and tax burdens. Additionally, the host recommends two REIT ETFs, Vanguard's VNQ and Charles Schwab's SCH, for diversified exposure with lower risk.
Takeaways
- 🏢 The speaker shares their top eight REITs (Real Estate Investment Trusts) for passive income after conducting thorough research.
- 🚗 Getty Realty Group (GTY) is highlighted for its focus on retail properties like gas stations and auto shops, with a high occupancy rate and a significant dividend yield.
- 📡 American Tower Corporation (AMT) is noted for its large market cap and management of infrastructure properties, including communications equipment and infrastructure.
- 🏪 Realty Income Corp is praised for its diversified portfolio of over 11,000 properties with strong tenants, offering a substantial dividend yield.
- 🏭 Stag Industrial is a favorite for its industrial properties and blue-chip clients, experiencing a surge in demand during the pandemic.
- 🎰 Vici Properties is an experiential REIT with a portfolio of gaming, hospitality, and entertainment destinations, including iconic Las Vegas Strip properties.
- 🏥 Medical Properties Trust (MPW) is identified for its focus on healthcare facilities, offering a high dividend yield despite recent market volatility.
- 📊 Two REIT ETFs are recommended for diversification and lower risk: Vanguard's VNQ and Charles Schwab's SCH, both with low expense ratios.
- 💰 The benefits of REITs include steady dividends, high returns, liquidity, and lower volatility compared to other asset classes.
- 💡 The cons of investing in REITs are the potential for illiquidity in non-traded REITs, lower growth and capital appreciation, and the tax burden on dividends, which can be mitigated by holding them in tax-advantaged accounts.
Q & A
What is the primary benefit of investing in REITs for passive income?
-REITs offer steady dividends as they are required to pay out 90% of their annual income as shareholder dividends, providing a consistent cash flow for investors.
How does Getty Realty Group (GTY) stand out among the REITs mentioned?
-Getty Realty Group (GTY) is highlighted for its high occupancy rate of 99.6%, which minimizes risk for investors. It also has a high dividend yield of 4.91% and has shown an increase of 41.63% over the last five years.
What is the significance of a REIT's dividend yield?
-A REIT's dividend yield is significant as it represents the percentage of the REIT's price that it pays out in dividends each year, which is an important factor for income-focused investors.
Why might an investor consider placing REITs in a Roth IRA?
-Placing REITs in a Roth IRA is beneficial because the assets grow tax-free, and the dividends received after retirement age are also 100% tax-free, providing a tax-efficient way to generate passive income.
What is the role of American Tower Corporation (AMT) in the REIT sector?
-American Tower Corporation (AMT) is a leading REIT with a market cap over a hundred billion, managing infrastructure properties including communications real estate, and offering a dividend yield of 2.88%.
What types of properties does Realty Income Corp (O) manage?
-Realty Income Corp (O) manages over 11,000 properties with clients like CVS Health, Walgreens, Dollar General, and Dollar Tree, mitigating risk by spreading it across a large number of properties.
How has the pandemic impacted STAG Industrial Properties' portfolio?
-The pandemic led to a surge in demand for STAG Industrial Properties' warehouse space as retailers focused on building out their e-commerce capabilities. However, as companies recovered, the stock has dropped as they relied less on STAG's properties.
What makes Vici Properties unique among the REITs discussed?
-Vici Properties is unique as it is an experiential REIT with a portfolio of gaming, hospitality, and entertainment destinations, including iconic facilities on the Las Vegas Strip, offering a dividend yield of 4.52%.
Why might Medical Properties Trust (MPW) be attractive to investors despite its recent downturn?
-Medical Properties Trust (MPW) might be attractive due to its high dividend yield of 9.59% and its focus on the medical field, which is considered sustainable and essential, potentially indicating value territory for long-term investors.
What are the advantages of investing in REIT ETFs like VNQ and SCH?
-Investing in REIT ETFs like VNQ and SCH offers diversification across multiple REITs, lower risk due to broad exposure, and simplicity for investors who prefer not to conduct extensive research on individual REITs.
What are the potential drawbacks of investing in REITs?
-Potential drawbacks of investing in REITs include the tax burden on dividends, the illiquidity of non-traded REITs, lower growth and capital appreciation due to the need to raise cash for new investments, and the inherent volatility of the real estate market.
Outlines
🏢 Introduction to REITs and Top Picks
The speaker begins by expressing their comfort in sharing the best REITs (Real Estate Investment Trusts) for passive income after conducting thorough research. They explain that while they typically invest in physical real estate, they've found interesting opportunities in REITs, which allow investors to own income-producing real estate without direct management. The speaker plans to share their top eight REITs, discuss the pros and cons of investing in them, and emphasize the importance of understanding one's investment goals. They introduce REITs as companies that own and often operate properties like apartments, warehouses, and hotels, and differentiate between individual REITs and REIT ETFs. The first REIT mentioned is Getty Realty Group (GTY), noted for its high occupancy rate and potential for growth due to its smaller market cap.
📈 Detailed Analysis of Top REITs
The speaker continues with an in-depth analysis of various REITs, discussing their market cap, current price, dividend yield, and historical performance. They cover American Tower Corporation (AMT), Realty Income Corp (O), STAG Industrial (STAG), and Vici Properties, each with unique characteristics and client bases. The speaker highlights the sustainability and growth potential of these REITs, as well as the risks and rewards associated with their market positions. They also touch on the tax implications of REIT dividends, suggesting a Roth IRA as a tax-efficient investment vehicle for higher-income earners. The speaker invites viewers to share their favorite REITs in the comments for community discussion.
💹 Conclusion and REIT ETFs
The speaker concludes by discussing REIT ETFs, which offer diversification and lower risk compared to individual REITs. They introduce two ETFs: the Vanguard Real Estate ETF (VNQ) and the Schwab US REIT ETF (SCH), both known for their low fees and broad exposure to the REIT market. The speaker outlines the benefits of investing in REIT ETFs, such as steady dividends, high returns, liquidity, and lower volatility compared to individual stocks. They also address the potential cons of investing in REITs, including illiquidity in non-traded REITs, low growth and capital appreciation, and the tax burden on dividends. The speaker encourages viewers to share their thoughts on REITs and to continue their investment journey with the insights gained from the video.
Mindmap
Keywords
💡REITs
💡Passive Income
💡Dividend Yield
💡Market Cap
💡GTY
💡AMT
💡O Realty Income
💡STAG
💡Vici Properties
💡MPW
💡REIT ETFs
Highlights
Introduction to the concept of REITs as a passive income investment vehicle.
Definition of a REIT and its role in owning and operating income-producing real estate.
Explanation of the two main types of REITs: individual REITs and REIT ETFs.
Advantages of investing in REITs for early retirement and monthly cash flow.
Discussion on the importance of understanding investment goals before choosing REITs.
Presentation of the top eight REITs found after extensive research.
Analysis of Getty Realty Group's (GTY) high occupancy rate and its benefits for investors.
Details on American Tower Corporation (AMT), its market cap, and its focus on communications real estate.
Overview of Realty Income Corp (O), its diversified property management, and client base.
Introduction to Stag Industrial (STAG), its focus on industrial properties, and its clients like Amazon and FedEx.
Discussion on Vici Properties, its experiential real estate portfolio, and iconic properties like Caesar's Palace.
Information on Medical Properties Trust (MPW), its focus on healthcare facilities, and its high dividend yield.
Advantages of investing in REIT ETFs for diversification and lower risk.
Introduction to Vanguard's VNQ, a REIT ETF with a low expense ratio and a history of solid returns.
Details on Charles Schwab's SCH, a low-fee REIT ETF that tracks a broad index of U.S. REITs.
Pros of investing in REITs including steady dividends, high returns, liquidity, and lower volatility.
Cons of REIT investing such as potential illiquidity, low growth, and the tax burden on dividends.
Call to action for viewers to share their thoughts on REITs and contribute to the community discussion.
Transcripts
all right you've asked many times and
now that I feel comfortable after
putting in the research I'm going to
share with you the best REITs that I
found for you to invest for passive
income now for real estate I invest in
actual hard asset real estate like the
actual rental property but after doing
the research for this video I found a
lot of these very interesting and I
really like what I found in these
regions so I'm going to give you my top
eight REITs that I found and then also
the pros and cons of investing in REITs
and let you be able to decide REITs
definitely have great benefits for
retiring early or at least retiring with
a bunch of cash flow every single month
a real estate investment trust or a Reit
is a company that owns and often
operates income producing real estate
such as Apartments warehouses
self-storage facilities malls and hotels
REITs are a way for you to invest in
commercial real estate property without
actually buying and managing those
properties yourself when looking up
different types of reads you'll quickly
become confused because there's a bunch
of two different types but the main two
that I'm going to go over in this video
are the Reit itself and then also Reit
ETFs each individual investor should
definitely look into how it may fit best
into their portfolio and for you
personally try to figure out what
exactly is it that you want do you just
want to have some investment in real
estate because you know you probably
should because it's a different asset
class or do you want the dividends that
it's bringing make sure you understand
the reason for that and let's go over
the top eight REITs that I found
so these are in no particular order but
the first one is gty or Getty Realty
Group this is one of the top retail
reads as it holds a bunch of gas
stations car washes and auto shops cars
aren't going anywhere and these are
vital for us every day real estate they
own is 99.6 percent occupied which is
exceptionally high and keeps the risk
very low for the investor dty has a
market cap of 1.6 billion its current
price is 35 dollars and one cent the
current dividend yield is 4.91 percent
which is very high over the last five
years it's up
41.63 percent now I like this one
because of the sustainability and the
type of real estate that it owns I also
like that it's over 99 occupied and the
other thing that I like that maybe some
might see as a negative is that it's a
little bit smaller so a market cap of
1.6 billion dollars isn't that big in
the grand scheme of things and so while
that might bring a little bit of risk it
also makes it so that there's still a
lot of growth that could happen because
it's not as big as some of these other
ones before we go any further you
definitely need to understand that the
taxes that come from the dividends of
REITs is different than the taxes of
regular dividend stocks REITs will fit
into the ordinary income for taxes where
most company dividends stock fall into
qualified dividends for that reason one
of the best places to have your REITs is
in a Roth IRA for those of you that are
higher income earners you can still have
a Roth IRA by converting through the
back door process that I outlined here
their assets will grow tax-free and your
dividends after retirement age will be a
hundred percent tax free which is an
insane benefit and a way to get massive
passive income for the rest of your life
and just because these Reit Dividends
are taxed a little bit higher than
normal dividends doesn't mean that
that's necessarily bad if you're
receiving double the size of a dividend
but it's taxed a little bit higher you
might still be making more money overall
next up is AMT or American power Court
they have a market cap of over a hundred
billion so this is a hundred times
bigger than Getty from before launched
in 2012 it manages infrastructure
properties including more than 183
000 pieces of multi-tenant
communications real estate put simply
the company owns and operates broadcast
and wireless communication equipment and
infrastructure around the world this
Reit has a current price of
216.72 cents dividend yield is 2.88
percent over the last five years it's up
54.78 now I like this one because of its
size to be honest real estate can
definitely be tricky and can be risky
but when you have a company that has so
many assets under management and has
such a history of being a good company
the risk really starts to fall next on
the list is one that most people who
invest in REITs would say is their top
Reit overall and this one is realty
income Corp ticker symbol o realty
income is a real estate investment trust
that acquires and manages properties
using long-term lease agreements it
manages over 11 000 properties with
clients including CVS Health Walgreens
Dollar General and Dollar Tree realty
income mitigates this risk by spreading
it across thousands of properties that
and the majority of its biggest clients
have an investment grade credit rating
because companies like 7-Eleven Walmart
and Home Depot are not little companies
so they're great tenants to have realty
income has a market cap of 41.93 billion
its current price is
66.85 the current dividend yield is a
nice 4.46 percent and over the last five
years it's grown 38 after much research
this is one of the top ones for me as
well and I really really like this Reit
and if you would take a second go ahead
and comment your favorite Reit so that
anybody watching this especially any
beginners can go ahead and see the ones
that I suggest but also maybe the ones
that you guys talk about I like to give
people a full library of places for them
to be able to begin their research so
that you all can gain value not only
from me but from the community of this
channel so thanks for being awesome and
let's move on to the next read so next
on the list is definitely a fan favorite
and this one is stag stag is a Reit
focused on Industrial properties with a
portfolio of more than 560 buildings
with over 111 million square feet of
usable space in 41 States it boasts a
blue chip roster of clients including
Amazon FedEx and DHL supply chain much
of its portfolio's warehouse space and
when retailers rush to build out their
e-commerce capabilities in the early
days of the pandemic stag saw demand for
its property surge higher but recently
the stock has dropped a bunch since the
recovery of those companies have not had
to rely as heavily on Stags properties
this one has a market cap of 6.25
billion its current price is
34.90 the current dividend yield is 4.21
percent and it has a nice growth rate
with the past five years up
45.24 next on the list is Vici
properties it's an experiential Real
Estate Investment Trust that owns one of
the largest portfolios of Market leading
gaming hospitality and entertainment
destinations including Caesar's Palace
Las Vegas MGM Grand and the Venetian
Resort Las Vegas three of the most
iconic entertainment facilities on the
Las Vegas Strip geographically diverse
portfolio consists of 49 Gaming
facilities across the United States and
Canada the ICI has a market cap of 35.65
billion as a current price of
34.48 a nice current dividend yield of
4.52 percent and over the last five
years it's grown
72.49 this one is definitely the most
exciting on the list for me and it
checks all the boxes of size
sustainability dividend yield and
possible growth now this next one has an
insane dividend yield is becoming a
favorite for a lot of long-term value
dividend investors mpw is the medical
properties trust Inc and it's a
self-advised real estate investment
trust which engages in the investment
acquisition and development of net
leased Health Care Facilities mpw is one
that I'm interested in especially
because it's in the medical field and
medical offices and hospitals are things
that we're always going to need so it's
very sustainable but even more appealing
is the fact that it's one of the more
beaten down stocks and its price has
dropped the most in the past five years
so this one might be in the value
territory mpw has a market cap of 7.24
billion dollars the price is only 12
dollars and nine cents now that current
dividend yield is at 9.59 percent over
the last five years though like I was
saying it's down five percent overall so
this one would definitely be the most
risky of the bunch but might be the one
with the highest upside so those first
six were all REITs and now the next two
are going to be Reit ETFs just like
investing in individual stocks versus
ETFs so Reit ETF is just a group of a
bunch of other REITs all put together
and so it's even more Diversified with
lower risk the first one on the list is
from Vanguard which is very reputable
and always has low fees and this one is
called vnq the Vanguard real estate ETF
invests in stocks issued by real estate
investment trusts companies that
purchase Office Buildings hotels and
other real property the goal is to
closely track the return of the msci U.S
investable market real estate 2550 index
the NQ has an expense ratio of 0.12
percent which is pretty low for an ETF
of REITs over the last 10 years it's had
an average return of over seven percent
per year which isn't bad for a read
because it also has a solid dividend two
of about three percent now the way in
which a dividend is paid is a little
complex here and it's basically a
combination of dividend income as well
as return of capital and capital gains I
like vnq because it's a broad index of a
bunch of types of REITs such as
specialized retail residential and a lot
more you can see here that they own
familiar favorites such as AMT and O So
by owning this Reit ETF you get exposure
to a bunch of top ones the current price
is
89.96 and this is one of the top Reit
ETFs in most portfolios the next wreath
that I like comes from my favorite
investing platform which is Charles
Schwab and this one is called SCH which
is the Schwab us Reit ETF seeks to track
as close as possible the total return of
the Dow Jones Equity all Reit capped
index composed of U.S Real Estate
Investment Trust classified as equities
I like this one so much because it's the
lowest fee for a Reit that I've seen at
.07 percent SCH H has had a 10-year
average return per year of 5.6 percent
and the dividend yield on this one is a
bit more straightforward at right at
about three percent again it holds all
of our favorites like AMT o and Vici I
like this one for the Simplicity and
it's just like in the regular stock
market if you were to hold vti that kind
of tracks the whole U.S stock market
this one to me is very similar in that
nature and it kind of just tracks all
the major REITs to a certain extent so
as far as Simplicity if you wanted
exposure to REITs but you didn't really
want to do a crazy amount of research
SCH might be your best bet so now as far
as the pros and cons of investing in
REITs the pros of investing in Reit
stocks are steady dividends because
REITs are required to pay 90 percent of
their annual income as shareholder
dividends they consistently offer some
of the highest dividend yields in the
stock market next would be high returns
as shown earlier in the video a lot of
these reads have beaten many
ETFs and individual stocks as far as
consistent five-year return next would
be liquidity publicly traded REITs are
far easier to buy and sell than the
tough process of actually buying
managing and selling commercial
properties and the last Pro would be
lower volatility REITs tend to be less
volatile than traditional stocks in part
because of their larger dividends seats
can act as a hedge against the ups and
downs of other asset classes however
they're not totally immune to volatility
but they might be just a little bit less
volatile and now as far as the cons of
REITs they may be illiquid especially
non-traded in private reads publicly
traded REITs are easier to buy and sell
than actual properties but non-traded
REITs and private REITs can be a
different story these REITs must be held
for years to realize potential gains
next would be low growth and capital
appreciation since REITs pay so much of
their profits as dividends to grow they
have to raise cash by issuing new stock
shares and bonds sometimes investors are
not always willing to buy them them such
as during a financial crisis or
recession so REITs may not be able to
buy real estate exactly when they want
to and the last con would just be that
tax burden that I was talking about
while Reit companies pay no taxes their
investors still must pay taxes on any
dividends they receive unless their read
Investments are held in a tax advantaged
account which was like that Roth IRA
that I was talking about before so now
I'm very curious to know your thoughts
on REITs so please comment down below
and get ready to watch this video now to
keep crushing your investing journey and
building that net worth Sky High
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