Easterly Government Properties (DEA)
Easterly is not the largest REIT on the market, but it stands out among its peers for a very simple reason: The company’s mission is to acquire, develop and manage commercial properties leased to the U.S. government.
In its latest investor presentation, the REIT said 98% of its lease income is “backed by full faith and credit of the U.S. government.” Few tenants are more reliable.
As of Sept. 30, 2022, Easterly’s portfolio consisted of 86 properties totaling 8.7 million square feet. They were 99.3% leased, with a weighted average remaining lease term of 10.5 years.
The company pays quarterly dividends 26.5 cents per share. At the current share price, that translates to an annual yield of 6.7%.
While Easterly might seem like an obvious choice, given the caliber of its tenants, the stock has actaully plunged over 20% in the last 12 months.
If you don’t want to gamble on individual winners and losers, you can always build a diversified passive-income portfolio just by using your “spare change.”
Read more: Centibillionaire Jeff Bezos says not to waste your money on a new car or household purchase: invest in these 3 better recession-proof buys instead
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Office Properties Income Trust (OPI)
As the name suggests, this REIT owns a lot of office buildings — its portfolio consists of 162 properties totaling 21.2 million square feet.
Over the past 12 months, OPI shares have tumbled 33%. It has a quarterly dividend rate of 55 cents per share and offers a staggering annual yield of 13.7%.
Unlike Easterly, OPI is not a pure-play government landlord. But the U.S. government is the REIT’s biggest tenant, contributing 19.1% to its annualized base rent.
Its other top tenants include big names like Google parent company Alphabet, the State of California and Bank of America.
The company says it earns 63% of its revenue from investment grade tenants — that is, tenants that pose a low risk of default.
In Q3 of 2022, the REIT’s same-property cash basis net operating income improved 0.3% year-over-year. It leased 606,000 square feet of space during the quarter for a weighted average lease term of 7.2 years and a weighted average roll up in rent of 21.6%.
A better way to generate income?
Of course, buying high-yield dividend stocks isn't the only way to generate investment income.
Amid hot inflation and the uncertain economy, millionaire moguls are finding creative ways to effectively invest their millions.
Physical commercial real estate, for example, has outperformed the S&P 500 over a 25-year period. With the help of new platforms, these kinds of opportunities are now available to retail investors. Not just the ultra rich.
With a single investment, investors can own institutional-quality properties leased by brands like CVS, Kroger and Walmart — and collect stable grocery store-anchored income on a quarterly basis.
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