Discover Two High-Dividend Stocks with Exceptionally High Yields, Perfect for Long-Term Investment over a Decade
The real estate sector has been underperforming in the stock market for quite some time now, with rising interest rates acting as a major hindrance. However, this situation presents an excellent opportunity for long-term investors, allowing them to buy high-dividend stocks at relatively lower valuations. Two such REITs, particularly attractive due to their high yields, are EPR Properties and Easterly Government Properties, which have lower valuations due to a mix of interest rate pressures and specific business risks.
Invest in Memorable Experiences with EPR Properties
EPR Properties has a dividend yield of 6.9%, making it one of the few REITs that provide monthly payments. This company specializes in experiential properties, including eat-and-play venues, water parks, ski resorts, and more. Its largest tenant is TopGolf. One potential risk for EPR is its exposure to the movie theater industry, which accounts for 36% of its rental income. Although the industry has shown signs of recovery, box office revenue remains uncertain, and it's wise to keep an eye on this issue. Despite these challenges, EPR is generating enough FFO to cover its dividend, making it an attractive long-term investment.
Navigating Uncertainty with Easterly Government Properties
Easterly Government Properties is trading at 52-week lows and has seen a 50% drop in value over the past three years. Its dividend yield is currently a strong 9.9%, making it the highest-paying REIT in this discussion. Easterly owns properties leased to various government agencies, including the FBI, Drug Enforcement Administration, and Department of Veterans Affairs. The company is under pressure due to concerns surrounding government offices and efficiency efforts, which could potentially impact lease renewals. However, Easterly's focus on mission-critical facilities and its strategic vision to acquire surplus government properties can help the company navigate these challenges.
Embrace the Rollercoaster for Patient Investors
Investing in either EPR Properties or Easterly Government Properties won't come without its challenges. Grappling with potential volatility due to market conditions and specific risks is a given. Nonetheless, both companies provide steady income streams and have room for growth. Emerging generations' preference for experiences and Easterly's focus on mission-critical facilities should help each company navigate the near-term challenges and emerge successful in the long run.
[1] Source: Morningstar[2] Source: NAREIT[3] Source: Company filings and earnings reports
Despite the headwinds faced by the real estate sector, long-term investors may find opportunities in REITs like EPR Properties and Easterly Government Properties, which have lower valuations due to interest rate pressures and specific business risks. EPR Properties, known for its high dividend yield of 6.9%, invests in experiential properties and generates enough FFO to cover its dividend. However, the company has potential risks, such as its exposure to the movie theater industry. Easterly Government Properties, on the other hand, has the highest dividend yield among the two at 9.9%, but faces challenges from concerns over government offices and efficiency efforts. Investing in these REITs requires patience and an understanding of their unique risks and growth potential. [1] [2] [3]
