Real Estate Investment Trusts (REITs) offer wide exposure, investment alternative, attractive returns, and stable periodic earnings through dividend distribution, making it an ideal investment to make gains in a volatile market.
Therefore, fundamentally sound high-yield REITs Ladder Capital Corp (LADR), Chimera Investment Corporation (CIM), and TPG RE Finance Trust, Inc. (TRTX) could be ideal portfolio additions for passive income.
REITs own or finance income-producing real estate across a range of property sectors offering an attractive investment alterative to the investors. REITs own and manage various property types or offer financing for income-producing real estate by purchasing or originating mortgages.
These REITs earn by collecting rent from tenants like diversified REITs or earn income from interest on real estate investments like Mortgage REITs.
According to Statista, as of November 2023, the ten leading diversified REITs in the U.S. came to a combined market capitalization of about $22.16 billion whereas the largest diversified REIT, W. P. Carey Inc., exhibited a market capitalization of $11.48 billion.
Further, amid slowed economic growth in 2024, REIT earnings are expected to be resilient supported by annual contractual rent increases, positive releasing spreads upon expiration, and the lease-up of vacant space. As per UBS, global REIT earnings are projected to grow over 10% cumulatively in 2024 and 2025.
With REITs’ ability to deliver attractive earnings makes it an attractive and defensive investment coupled with stable earning reliability as REITs are required to distribute at least 90% of their taxable income to shareholders as dividends further promotes its appeal.
Given these encouraging trends, let's delve deeper into the fundamentals of top high-yield REIT stocks LADR, CIM, and TRTX.
Ladder Capital Corp (LADR)
LADR operates as an internally-managed real estate investment trust. The REIT operates in three segments: Loans; Securities; and Real Estate. It originates conduit first mortgage loans, invests in note purchase financings, and in commercial mortgage-backed securities.
On June 14, LADR’s Board of Directors declared a second quarter 2024 dividend of $0.23 per share of Class A common stock. The cash dividend is payable on July 15, 2024 to stockholders of record as of the close of business on June 28, 2024.
LADR pays an annual dividend of $0.92, which translates to a yield of 8.14% at the current share price. Its four-year average dividend yield is 8.64%. Moreover, the company’s dividend payouts have increased at a CAGR of 4.8% over the past three years.
In terms of forward non-GAAP P/E, LADR is trading at 8.84x, 14.8% lower than the industry average of 10.37x. Also, the stock’s trailing-12-month Price/Book of 0.95x is 13.5% lower than the industry average of 1.10x.
For the first quarter that ended on March 31, 2024, LADR posted net interest income of $37.14 million. The company’s distributable earnings and distributable EPS came in at $42.28 million, and $0.33, up 5.7% and 3.1% from the previous quarter, respectively.
In addition, the company’s cash and cash equivalents stood at $1.22 billion as of March 31, 2024, versus $1.01 billion as of December 31, 2023.
Street expect LADR’s revenue and EPS for the fourth quarter (ending December 2024) to increase 27.2% and 4.7% year-over-year to $76.96 million and $0.34, respectively. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
LADR’s stock has gained 1.6% over the past month and 7.4% over the past year to close the last trading session at $11.30.
LADR’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Quality and Sentiment. Within the REITs - Diversified industry, LADR has topped among the 45 stocks.
In addition to the POWR Ratings highlighted above, you can check LADR’s ratings for Growth, Value, Stability, and Momentum here.
Chimera Investment Corporation (CIM)
CIM invests in a portfolio of mortgage assets, including residential mortgage loans, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, agency mortgage-backed securities secured by pools of commercial mortgage loans, business purpose and investor loans, and other real estate-related securities.
On June 13, CIM’s Board of Directors declared second quarter cash dividend of $0.35 per common share, reflecting an increase from its first quarter cash dividend of $0.33 on a reverse-stock-split adjusted basis. The dividend is payable July 31, 2024 to common stockholders of record on June 28, 2024. The ex-dividend date is June 28, 2024.
CIM pays an annual dividend of $1.40, which translates to a yield of 10.55% at the current share price. Its four-year average dividend yield is 14.39%.
In terms of trailing-12-month Price/Book, CIM is trading at 0.40x, 63.2% lower than the industry average of 1.10x. Further, the stock’s trailing-12-month Price/Cash Flow multiple of 4.45 is 41.9% lower than the industry average of 7.66. Similarly, its trailing-12-month non-GAAP P/E of 8.85x is 12% lower than the industry average of 10.05x.
For the first quarter that ended March 31, 2024, CIM reported net interest income of $65.11 million. Its earnings available for distribution came in at $30.56 million and $0.12 per adjusted common share, respectively.
Furthermore, the company’s cash and cash equivalents and total assets amounted to $168.96 million and $12.55 billion as of March 31, 2024.
Analysts expect CIM’s revenue and EPS for the fiscal year (ending December 2024) to increase 7.5% and 272% year-over-year to $283.20 million and $1.45. Further, for the fiscal year (ending December 2025), the company’s revenue is expected to grow 4.8% year-over-year to $296.76 million and its EPS is expected to grow 10.3% year-over-year to $1.60.
Over the past month, the stock has surged 11.9% to close the last trading session at $13.27.
CIM’s strong prospects are reflected in its POWR Ratings. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
CIM has a B grade for Growth, Quality and Value. The stock is ranked #6 among 27 stocks within the REITs - Mortgage industry.
To see the other ratings of CIM for Stability, Sentiment, and Momentum, click here.
TPG RE Finance Trust, Inc. (TRTX)
TRTX is a commercial real estate finance company which originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments. It invests in commercial mortgage loans, subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments.
On June 17, TRTX’s Board of Directors declared a cash dividend of $0.24 per share of common stock for the second quarter of 2024. The dividend will be payable on July 25, 2024 to common stockholders of record as of June 27, 2024. TRTX pays an annual dividend of $0.96, which translates to a yield of 10.98% at the current share price. Its four-year average dividend yield is 13.01%.
During the first quarter ended March 31, 2024, TRTX’s net interest income increased 26.1% year-over-year to $26.80 million. Its income before income taxes grew 165.8% from the year-ago value to $17.13 million. Its distributable earnings were $23.33 million and $0.30 per common share, loss of $159.75 million and $2.05 per share during the prior quarter.
In addition, the company’s cash and cash equivalents and total assets stood at $203.08 million and $3.83 billion as of March 31, 2024.
Street expects TRTX’s revenue for the second quarter (ending June 2024) to increase 11.6% year-over-year to $29.18 million and its EPS is expected to be $0.25 for the same quarter. Further, the company’s revenue and EPS for the fiscal year (ending December 2025) are expected to increase 1.5% and 9.1% year-over-year to $116.13 million and $1.10.
TRTX’s shares have gained 25.2% over the past six months and 15.2% over the past year to close the last trading session at $8.74.
TRTX’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
Within the REITs - Mortgage industry, TRTX is ranked #4 among the 26 stocks.
Click here to access all ratings of TRTX (Growth, Momentum, Value, Quality, Stability, and Sentiment).
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LADR shares were trading at $11.36 per share on Wednesday afternoon, up $0.06 (+0.53%). Year-to-date, LADR has gained 0.82%, versus a 15.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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