Gladstone is a real estate investment trust that owns and rents out 151 industrial and office properties in 27 states.

For example…

• It leases 241,000 square feet to Berry Global in Jackson, Tennessee
• It leases 115,000 square feet to Eastern Metal Supply Holdings in Charlotte, North Carolina
• It leases 120,000 square feet to Corning in Horseheads, New York.

Last year, funds from operations (FFO), a measure of cash flow used by REITs, grew by 0.8% to $59.2 million. This year, the growth rate is expected to be nearly identical, as FFO is forecast to rise to $59.7 million. However, that is still lower than 2022’s $60.6 million.

Safety Net wants to see cash flow growth over both one- and three-year periods.

The numbers are close, though, so if FFO comes in a little over expectations, it could show positive growth over three years.

The bigger problem is Gladstone Commercial pays out more in dividends than it takes in.

Last year, the company paid shareholders $62.8 million while generating $59.2 million in FFO. In other words, it paid $1.06 in dividends for every $1 in FFO.

This year, that’s forecast to dip to $1.04.

We always want dividends paid to be below cash flow. Otherwise the company has to dip into cash, borrow money, or sell stock to afford the difference.

Gladstone Commercial pays a $0.10 monthly dividend, which comes out to an impressive 11% yield.

However, there was a cut recently. At the beginning of 2023, management lowered the dividend to the current rate from $0.1254 per share.

So the company can’t afford its dividend, and management showed a willingness to cut the payout less than three years ago.

Until FFO exceeds what the company is paying out, Gladstone Commercial’s dividend is not safe.

Dividend Safety Rating: F

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirementhomepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

The post Is This Company’s Dividend as “GOOD” as Its Ticker? appeared first on Wealthy Retirement.

The company is an innovative real estate investment trust, or REIT, that leases its 108 real estate assets to 30 cannabis operators in 19 states.

REITs are known for paying sizable dividends, and Innovative Industrial Properties’ 7% annual yield makes it one of the higher-yielding REITs.

Can it continue to pay such a strong dividend, or is management about to harsh investors’ buzz?

As you likely know by now, cash flow is one of the key factors we consider. For REITs, we use funds from operations (FFO) as our measure of cash flow.

Innovative Industrial Properties’ FFO has been rising for the past few years. It totaled $232 million in 2023 (up from $211 million the prior year), and I expect it to increase to around $250 million in 2024.

Last year, the company paid shareholders $204 million in dividends for an 88% payout ratio.

I’m comfortable with REITs paying out up to 100% of their FFO in dividends, as they are required by law to pay out at least 90% of their earnings.

(Earnings aren’t the same as cash flow or FFO, but because of that obligation, REITs often pay out nearly all of their FFO to shareholders. That’s why we raise our payout ratio limit from our typical 75% for normal stocks to 100% for REITs.)

This year, I expect Innovative Industrial Properties’ payout ratio to rise to 97% – even closer to my limit. It will be worth watching to make sure it doesn’t go over 100%, because if it does, I will have to lower the stock’s dividend safety rating.

However, the company has raised its dividend at least once every year (and 16 times in total) since it began paying one in 2017, so management has shown its commitment to rewarding shareholders.

In short, keep an eye on that payout ratio… but for now, there doesn’t appear to be anything too concerning. Innovative Industrial Properties’ yield should stay as high as Woody Harrelson.

Dividend Safety Rating: A

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Innovative Industrial Properties: A True “High” Yielder appeared first on Wealthy Retirement.

The Vanguard Real Estate ETF (NYSE: VNQ) is in bear market territory, down almost 20% from where it traded last fall.

That’s much worse than the 3% decline in the S&P 500 over the same period.

The rapid rise in interest rates has driven the downturn in the REIT sector.

REITs use debt to finance portions of the real estate they own. Rising interest rates mean higher interest expenses, which negatively impact earnings.

Also putting a damper on the REIT sector are the record-high commercial office vacancy rates in the U.S. In the first quarter, office vacancies hit a concerning 18.6%.

The work-from-home trend is not good for office landlords.

The concerns that investors have about the REIT sector are valid. But when an entire sector gets sold off like this, you can bet some babies get thrown out with the bathwater.

In this case, Alexandria Real Estate Equities (NYSE: ARE) is one such baby.

ARE REIT on Our Radar

Alexandria is focused on a very specific real estate niche. Its real estate is rented by pharmaceutical and healthcare companies.

Instead of regular office spaces, Alexandria owns properties that are specialized to suit the pharmaceutical and healthcare businesses that use them.

These properties are unique and not interchangeable with the regular office buildings that are currently experiencing high vacancy rates. This means that Alexandria’s tenants will not be leaving the company for cheaper office space down the street.

Alexandria’s 2023 earnings results speak to the fact that this isn’t just another plain old office REIT.

In the first quarter, 94% of Alexandria’s rental space was occupied. That rate was the same a year ago, and it is far superior to those of Alexandria’s REIT peers.

And even better, the average rental revenue that Alexandria receives from its tenants increased by a record 48% in the first quarter!

Clearly, the REIT vacancy problem is not affecting Alexandria. Not only are Alexandria’s occupancy levels high, but the rent being generated from tenants has also skyrocketed.

Rising interest rates are also not a problem for the company.

Over 96% of its debt is fixed at an average interest rate of just 3.6%, meaning rising interest rates have had virtually no impact on the business.

Plus, the average remaining term on that debt is more than 13 years. So Alexandria is locked in at excellent borrowing rates for a long time to come.

Despite being insulated from the factors that have crashed the REIT sector, Alexandria’s share price has fallen 30% over the past year.

With this sell-off, Alexandria’s shares look attractively priced. The stock is currently trading at just 65% of the company’s net asset value.

That means we’d be paying just $0.65 on the dollar against the value of the assets that Alexandria holds.

On top of that, Alexandria pays a very secure dividend, which now yields almost 4%.

A cheap price and a big dividend yield is a nice combination.

The REIT sector is down big, and this has created a very nice opportunity to own shares of this high-quality REIT at an attractive entry price.

The Value Meter rates Alexandria Real Estate as “Extremely Undervalued.”

The post Work-From-Home Hasn’t Hurt the ARE REIT appeared first on Wealthy Retirement.

The New York City-based company has 1,057 properties across 48 states, including Lafayette Pavilions in Lafayette, Indiana; Wallace Commons in Salisbury, North Carolina; and Golf Road Center in Schaumburg, Illinois.

There’s nothing like a fat double-digit yield to excite income investors. But can shareholders expect Necessity Retail to continue to pay such an attractive dividend?

Let’s look at the numbers.

To determine dividend safety in REITs, we look at a measure of cash flow called funds from operations, or FFO.

Wall Street expects to see a big jump in FFO when the company releases its full-year figures for 2022, which it should do around the same time you’re reading this email. Analysts expect FFO to rise from $95.3 million to $128.2 million. In 2023, FFO is forecast to rise to $135.6 million.

Assuming the company pays $114.3 million in dividends (as expected), the payout ratio will be 89%. If the dividend stays the same next year, based on the company’s 2023 estimates, the payout ratio would drop to 84%.

For a REIT, anything below 100% is good. REITs must pay out at least 90% of their earnings in dividends. FFO is not the same as earnings, but because of this rule, REITs often pay out most of their FFO in dividends as well.

Necessity Retail REIT began paying a dividend in 2018. Unfortunately, the company cut the dividend in 2020 and has not raised it since then. The current dividend is $0.2125 per quarter, which comes out to 12.7% annually.

We never like to see a dividend cut. That’s an automatic downgrade. But considering how solid the financials look, the dividend appears fairly safe.

Dividend Safety Rating: B

If you have a stock whose dividend you’d like me to analyze, leave the ticker symbol in the comments section.

Be sure to check whether I’ve written about your favorite stock recently. Click on the word “Search” in the top right part of the website homepage, type in the company name and hit enter.

The post A Small Cap With a 12.7% Yield appeared first on Wealthy Retirement.

However, while the rest of the market rides the roller coaster, I want to direct your attention to a reliable backdoor tech play… Iron Mountain (NYSE: IRM).

Normally, a real estate investment trust (REIT) like Iron Mountain wouldn’t be considered a “tech stock,” but Iron Mountain is a physical and digital storage company that successfully latched on to the booming demand for data storage.

Historically, Iron Mountain’s bread and butter was physical storage. Companies are required to keep important financial records for long periods of time, so Iron Mountain solidified itself as the place for companies to store their paper documents.

In today’s digital era, Iron Mountain is still holding strong. Its clients currently include over 95% of the companies on the Fortune 1000, and Iron Mountain has a 98% customer retention rate.

Iron Mountain’s growing data storage footprint now consists of 20 different locations over three continents.

We’ve rated Iron Mountain’s dividend safety here in Safety Net before, back in 2019, when it took a hit to its rating for having a payout ratio that was slightly over 100%.

As a REIT, Iron Mountain is required to pay out at least 90% of its funds to investors, so we want to see a payout ratio under 100%.

However, Iron Mountain has hit its stride since we last graded the company – particularly when it comes to adjusted funds from operations (AFFO), the measure of cash flow we use for REITs.

AFFO came in at $649.3 million in 2019 but rose to $663.1 million in 2020 and $724.5 million in 2021.

For 2022, however, Iron Mountain’s AFFO is expected to be $1.1 billion – a 52% jump from last year’s AFFO and the best the company will have ever had.

These steadily rising numbers are more than enough to support Iron Mountain’s dividend – a dividend the company has raised six times without a cut in the past decade.

Additionally, Iron Mountain paid out 99% of its AFFO to investors last year, but this year, it has paid out only 65% so far.

Given that Iron Mountain hasn’t raised its dividend since 2019 and it’s paying way under what’s required, I think not only that Iron Mountain’s dividend is safe from being cut but also that Iron Mountain could raise its dividend payout in the near future.

Dividend Safety Rating: A

If you have a stock whose dividend safety you’d like analyzed, leave the ticker symbol in the comments section.

You can also check to see whether we’ve written about your favorite stock recently. Just click on the magnifying glass in the upper right corner of the Wealthy Retirement homepage and type the company’s name in the box.

Good investing,

Brittan

The post Your Backdoor Tech Play for a Volatile 2022 appeared first on Wealthy Retirement.

(By the way, it’s absolutely free to subscribe to State of the Market. With a click of your mouse, you’ll never miss a video on making or saving money.)

Annaly Capital Management (NYSE: NLY) was one of the companies that I used as an example of having an overinflated dividend.

Annaly yields more than 14%, so it’s natural that it’s an often-requested stock here at Safety Net.

First, the good news: Annaly makes more money than it pays out in dividends, and it is expected to do so again in 2022.

Last year, the mortgage real estate investment trust (REIT) generated $1.73 billion in net interest income (NII) while paying out $1.36 billion in dividends. NII is the difference between what a mortgage REIT collects in mortgage payments and what it pays in borrowing costs, after expenses are subtracted.

For 2022, NII is forecast to decline to $1.58 billion, while dividends paid is expected to stay relatively flat at $1.37 billion. So NII will still cover the dividend if those numbers are met, but NII is going the wrong way, which is not good.

Annaly is what’s known as a yield trap.

It sucks investors in with its high yield and then slashes the dividend, at which point, its stock price craters.

A 14% dividend yield is great, but not when it turns into a 7% yield over time and you lose a third of the value of your investment in a year.

That’s exactly what has happened with Annaly, which is down 34% over the past year.

Annaly has cut its dividend 10 times since 2011.

Annaly is what’s known as a serial dividend cutter. It will lower the dividend again at some point. Just a cursory glance at the graph above shows you what direction the dividend is going. Often, when a company reduces its dividend, the stock price suffers as well.

If you own Annaly, expect another dividend cut within the next year or two.

Dividend Safety Rating: F

If you have a stock whose dividend safety you’d like me to analyze, leave the ticker symbol in the comments section.

You can also check to see whether I’ve written about your favorite stock recently. Just click on the magnifying glass on the upper right part of the Wealthy Retirement homepage, type in the ticker symbol and hit enter.

Good investing,

Marc

The post Don’t Get Trapped by a 14% Yield appeared first on Wealthy Retirement.

Because our portfolios should always thrive…

Even when inflation is sky-high and the stock market has taken a beating year to date.

These three dividend-paying stocks have held steady or have even gone UP so far in 2022, and they carry some of the HIGHEST dividend growth rates on the market.

Marc’s recommendations include…

• A Southern real estate investment trust yielding a juicy 7.1%
• A 2.8%-yielding POWERFUL dividend grower in the tech sphere
• A 3%-yielding online bank that Marc calls “a true bro.”

Join Marc in this week’s State of the Market and discover three dividend payers with breakneck yield growth that are your safest shots at outpacing today’s converging headwinds.

The post Top 3 Fastest-Growing Dividends appeared first on Wealthy Retirement.

As fulfilling as it was, it was never an easy industry to work in.

Today, we’re going to explore whether it – and one company in particular – is a worthwhile industry to invest in.

The challenge with assisted living care facilities (and the companies that run them) is that steady revenue is contingent on keeping rooms full.

This problem reared its head like never before during the pandemic, which struck retirement home occupancy particularly hard.

A company that knows this struggle well is real estate investment trust (REIT) Omega Healthcare Investors (NYSE: OHI), which owns the real estate for 944 assisted living and skilled nursing facilities in the U.S. and U.K.

It makes money by collecting rent checks from assisted living facilities that rent its properties.

When we rated Omega a little over a year ago, it earned itself an “A.” Back then, it sported a 7.2% yield. Now it has an 8.6% yield.

That’s an attention-getting number. But with the retirement home market still struggling through the pandemic, it’s worth looking to see whether this dividend is still as safe as it was before…

The company recently said occupancy levels in its assisted living facilities are still meaningfully below pre-pandemic levels. And it’s not hard to see why…

As of March 2021, nearly 1 in 12 long-term care residents died from COVID-19. For nursing homes alone, 1 in 10 residents lost their lives to COVID-19.

Plus, with new variants popping up constantly, it’s harder to justify sending your loved ones to live where you’re unsure they’re safe.

At the end of the day, assisted living facilities need to fill beds to pay landlords like Omega. And if their revenues are disrupted dramatically, it will impact Omega.

And that’s exactly what’s playing out right now…

Seeing as Omega is a REIT, it’s more beneficial to look at its funds from operations (FFO) rather than earnings or cash flow.

The company had been building up its FFO for years. It recorded $444.3 million in 2017, $587.4 million in 2018 and $640 million in 2019… and then it saw a dip to $555.9 million in 2020.

In 2021, Omega’s estimated funds from operations rebounded to $755.1 million.

However, it achieved that rebound by applying security deposits, issuing letters of credit and using other financial avenues in order to help tenants make rent.

Omega has cautioned that once those options dry up, FFO will not look so bright.

In more bad news, Omega’s payout ratio was 110.15% in 2020. That’s above the 100% line SafetyNet Pro is okay with for REITs, so Omega received a penalty there.

But there’s also a decent amount of good news…

Omega shrank its payout ratio to an estimated 84.81% in 2021, and it’s never cut its dividend over the last 10 years (but it has also never raised it). Furthermore, dividends rose from $612.3 million in 2020 to an estimated $640.4 million in 2021.

All in all, Omega is a mixed bag.

It faces a looming threat of tenants soon not being able to pay their rent… and there’s no telling when the industry as a whole will bounce back.

Omega has been successful in diversifying its business to pump up its funds. It also supplemented some of its loss by selling off a couple of its facilities – placating investors for now.

Some of the solutions the company came up with to its problems feel more like Band-Aids rather than real fixes…

In the short term, however, it looks like this dividend is moderately safe.

Dividend Safety Rating: C

If you have a stock whose dividend safety you’d like analyzed, leave the ticker in the comments section.

You can also check to see whether we’ve written about your favorite stock recently. Just click on the magnifying glass in the upper right corner of the Wealthy Retirement homepage and type the company name in the box.

Good investing,

Brittan

The post Can This 8.6%-Yielding REIT Outmaneuver COVID-19? appeared first on Wealthy Retirement.

Less than a year later, MFA Financial eliminated its dividend entirely. The mortgage real estate investment trust (REIT) reinstated the dividend in September of 2020 at $0.05 per share – 75% below where it had been in 2019.

Since then, MFA Financial has raised the dividend three times to where it currently stands at $0.11 per share, which is still 45% below the 2019 level.

Can the company maintain even that lower payout?

In 2021, net interest income, the measure of cash flow we use for mortgage REITs, is expected to come in at $204.2 million. MFA Financial is forecast to have paid out $169.8 million in dividends for a payout ratio of 83%, which is fine for a REIT.

However, excluding 2020, net interest income is at its lowest level since the mortgage meltdown in 2008.

So we have a company that can’t get its net interest income moving in the right direction. MFA Financial also has a history that includes not only cutting the dividend but eliminating it entirely less than a year and a half ago.

Unless net interest income starts moving in the right direction, expect another dividend cut in the not-too-distant future.

Dividend Safety Rating: F

If you have a stock whose dividend safety you’d like analyzed, leave the ticker in the comments section.

You can also check to see whether I’ve written about your favorite stock recently. Just click on the magnifying glass in the upper right corner of the Wealthy Retirement homepage and type the company name in the box.

Good investing,

Marc

The post A 9.6% Yielder Likely to Cut Again appeared first on Wealthy Retirement.

As of December 1, CEOs and other insiders sold $69 billion worth of their shares in 2021, a new annual record and 30% more than 2020.

Insiders sell for a variety of reasons, including estate planning and tax management. But a record number of insider sales should make you a little nervous.

On the flip side, when insiders buy, it is for one reason: They believe that the stock is going higher and that they will make money.

If you’ve been reading Wealthy Retirement for even just a little while, you know I’m the dividend guy. I wrote the book on getting rich with dividends, appropriately named Get Rich with Dividends.

So I recently decided to take a look at the highest-yielding dividend stocks insiders were buying rather than selling.

Below are three of the highest-yielding dividend payers whose insiders are expressing confidence in their companies and putting their money where their mouths are…

Artisan Partners Asset Management (NYSE: APAM)

Yield: 9.2%

This investment firm, with more than $169 billion under management, has a variable dividend policy. Over the past four quarters, it has paid $3.92 per share in dividends, which equals a yield of 8.4%. Annualizing the latest $1.07 per share dividend comes out to a yield of 9.2%.

Independent Director Tench Coxe, who also serves on the board of directors at Nvidia (Nasdaq: NVDA), bought $10 million worth of Artisan Partners’ stock on December 14, more than tripling his holdings.

The current dividend will pay him nearly $1 million a year.

Claros Mortgage Trust (NYSE: CMTG)

Yield: 8.7%

Claros Mortgage Trust just went public in November. When a company goes public, executives often sell shares and cash out.

Not this mortgage real estate investment trust’s CEO and chairman, Richard Mack.

In December, he bought $1.9 million worth of shares in the open market, increasing his holdings by more than 10%.

Starwood Property Trust (NYSE: STWD)

Yield: 7.7%

This hotel real estate investment trust’s CEO, Barry Sternlicht, bought 217,500 shares worth more than $5 million on December 20. On the same day, the company’s president, Jeffrey DiModica, acquired 6,500 shares for more than $148,000.

Insider buying is not a guarantee that a stock will go higher. But when the leaders of a company buy shares with their own money, that is a vote of confidence and an indication that business is strong.

Plus, when the company pays dividends, the insiders, who usually have substantial holdings, get another large check every quarter.

I expect to see plenty more insider selling in 2022. Keep your eye on the stocks insiders are buying instead.

Good investing,

Marc

The post Three High-Yielding Dividend Stocks With Insider Buying appeared first on Wealthy Retirement.