Buy These 3 High-Yield REITs Raising Dividends in December

We are almost at the end of another year, and I hope your dividend income stream has marched steadily higher throughout 2018.

Tracking your dividend income and managing your portfolio to grow that income makes it easier to go through market corrections like we saw in October.

One bit of assistance I like to provide is to list those real estate investment trusts (REITs) that should announce higher dividend rates in the upcoming months. This knowledge can give you a jump on the rest of investing public, which will be surprised when the positive news is actually announced.

I maintain a database of about 130 REITs. With it I track current yields, dividend growth rates and when these companies usually announced new dividend rates. Most REITs announce a new dividend rate once a year, and then pay that rate for the next four quarters.

Currently about 85 REITs in my database have recent and ongoing histories of dividend growth. Out of that group, higher dividend announcements will happen during almost every month of the year. In the face of market volatility, REIT values have held up reasonably well in 2018.

Related: Buy This 8.4% REIT That’s Raised Dividends Every Quarter

Dividend increases are the best defense against higher market interest rates. Higher dividend announcements may be the catalyst to higher share prices for individual REIT shares.

My list shows several companies that historically announce higher dividends in December and should do so again this year. Investors will start earning the higher payouts in the new year.

Remember, you want to buy shares before the dividend announcement to get the benefit of a share price bump caused by the positive news event.

Here is the list of REITs to consider:

Ventas, Inc. (NYSE: VTR) is a large-cap REIT that owns a portfolio of properties leased by companies providing the full range of healthcare services. Ventas has done very well for investors, growing its dividend at a compounding 8% annual rate since 2001.

For the last three years, revenue and cash flow growth has been a challenge across all healthcare REITs. Ventas has sold some assets and used the proceeds to pay down debt. As a result, the company’s balance sheet is stronger, but normalized FFO per share for the first three quarters of 2018 were down 5% compared to the same period in 2017.

Ventas increased the dividend by 2% last year and has sufficient cash flow coverage to announce a similar increase this year.

The next dividend will be declared on about December 10, with a mid-month ex-dividend date and payment at the end of the year.

VTR yields 5.4%.

CubeSmart (NYSE: CUBE) is a mid-cap sized self-storage properties REIT. This has been a fast growth REIT, with the dividend growing by 158% over the last five years.

Growth in the self-storage space has moderated, but this means a decline to high single digit annual growth from the previous double digit per year rates.

Last year the dividend was increased by 11%, right in the middle of my 10% to 12% forecast. This year I expect the dividend go be raised by 5% to 6%.

The new dividend rate will be announced in mid- December. The stock will go ex-dividend at the end of December with payment in mid-January.

CUBE yields 4.1%.

CoreSite Realty Corp (NYSE: COR) is a data center REIT. Data centers are one of, if not the fastest growing REIT subsector. Over the last year the company increased its dividend by 14%.

Free cash flow out which dividends are paid has grown by 13.6% over the last year.

Over the last couple of years CoreSite has been announcing a higher dividend every other quarter. The last increase two quarters ago increased the payment to investors by 5.1%. Another rate bump of 5% to 8% is due.

The next dividend increase should be announced in early December, with ex-dividend at the end of the month and the dividend will be paid in mid-January.

COR yields 4.4%.

Bonus Recommendation: Douglas Emmett, Inc. (NYSE: DEI) is a regionally focused REIT, owning and operating office and multi-family properties in California and Hawaii. The has a strong focus on developing new properties or redeveloping currently owned properties for higher, better use – and rents.

The DEI dividend has been increased every year since 2011. Last year the payout was increased by 8.7%. The five-year compound dividend growth rate is 9.7%.

The current dividend is just 50% of FFO, with cash flow per share growing by about 5% per year.

I forecast another 8% dividend increase to be announced on about December 8. Ex-dividend will be at the end of December and the payment will be in mid-January.

DEI yields 2.8%.

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Source: Investors Alley