Easterly Government Properties (DEA)

VA Lubbock
Google Maps

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 99% 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, Easterly’s portfolio consisted of 88 properties totaling 8.3 million square feet. They were 99% leased, with a weighted average remaining lease term of 9.6 years.

In July, the company raised its quarterly dividend payout to 26.5 cents per share. At the current share price, that translates to an annual yield of 4.6%.

While Easterly might seem like an obvious choice, given the caliber of its tenants, the stock is only up about 2% over the past 12 months — not particularly impressive in a rallying market.

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Office Properties Income Trust (OPI)

5000 Corporate Ct, Holtsville, NY
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As the name suggests, this REIT owns a lot of office buildings — its portfolio consists of 178 properties totaling 23.3 million square feet — but its performance is anything but boring.

Over the past 12 months, OPI shares have climbed 10.8%. It has a quarterly dividend rate of 55 cents per share and an annual yield of 8.7%.

Unlike Easterly, OPI is not a pure-play government landlord. But the U.S. government is the REIT’s biggest tenant, contributing 19.7% 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 2021, the REIT’s same-property cash basis net operating income improved 1% year-over-year. It leased 659,000 square feet of space during the quarter for a weighted average lease term of 10.9 years.

A more colorful alternative

Andy Warhol gallery
Sergei Bachlakov/Shutterstock

The right REIT can be a solid investment. But remember, stocks of all kinds are volatile and often correlate with each other. If a market-wide downturn lies ahead, even blue-chip dividend stocks could get pummeled.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

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