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.

Part of that total return has been from the company’s dividend yield. The current yield is 3.7%, though Oxford Income Letter subscribers who bought it when it was first recommended are earning over 8% annually on the original price.

Whether you’re earning more than 8% or today’s 3.7% or anything in between, you need to feel confident that the dividend is safe.

Let’s dig in and see if it is.

CareTrust REIT leases nursing homes and assisted and independent living facilities to operators. It has over 400 properties across 35 states and another 130 properties in the U.K.

Because CareTrust is a REIT (real estate investment trust), we use a measure of cash flow called funds from operations, or FFO.

In 2024, FFO grew 66% to $331 million. Over the past three years, it has grown by an average of 17% per year. That’s exceptional.

This year, that growth is forecast to slow to 8%, with FFO coming in at $359 million. In 2026 and 2027, growth is expected to accelerate into the double digits again.

CareTrust REIT paid shareholders $172 million in dividends last year for a payout ratio of just 52%. This year, the projected $189 million in dividend payments should result in a payout ratio of 53%.

So the company generates nearly double the cash flow that it needs in order to pay the dividend. With FFO expected to continue to rise, the company should be able to keep raising the dividend, as it has every year since it began paying one in 2014.

CareTrust REIT has everything you want to see in a Perpetual Dividend Raiser. It has a stellar track record of annual dividend increases, it generates strong cash flow, and it has a low enough payout ratio to ensure that the dividend should remain intact even if the company hits an unexpected obstacle.

It’s no wonder the stock has performed so well over the past several years.

CareTrust REIT’s dividend is very safe.

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 This REIT Continues to Reward Investors appeared first on Wealthy Retirement.

Editor’s Note: Today, I’m excited to announce the latest addition to the Wealthy Retirement website: a new-and-improved commenting system that will allow you to share your thoughts, ask questions, submit Safety Net and Value Meter requests, and interact with your fellow readers like never before!

After you read today’s Safety Net, be sure to check it out below!

– James Ogletree, Managing Editor

In June of 2022, I reviewed the dividend safety of Annaly Capital Management (NYSE: NLY). I warned investors, “If you own Annaly, expect another dividend cut within the next year or two.” At the time, the quarterly dividend was $0.88 per share. Nine months later, it was lowered to $0.65.

It stayed there through all of 2023 and 2024. Then, this year, it was raised to $0.70 in the first quarter.

Now, with a juicy 16% yield, has Annaly turned the corner back toward dividend growth?

Annaly Capital Management is a mortgage real estate investment trust, or REIT, that focuses on individual residences. It has an $81 billion portfolio that has financed more than 900,000 homes.

Net interest income is the cash flow metric that we look at for mortgage REITs. Annaly’s is not good. It’s been falling like a stock market in the face of new tariffs (too soon?).

Last year, net interest income rose to $248 million from -$111 million the year before. But that was still a fraction of the nearly $1.5 billion the company made in 2022. This year, net interest income is expected to be nearly cut in half to $130 million.

An even bigger problem is that Annaly pays out about $1.5 billion in dividends each year, but it hasn’t generated that much cash flow in several years. It can’t afford its dividend.

Making matters worse, Annaly has a notorious reputation of being a dividend cutter, with multiple reductions in the past 10 years (and even more if you go back further).

Management has proven that when the going gets tough, they cut the dividend.

Given the company’s history of lowering its dividend and the fact that net interest income doesn’t come close to paying for the current $0.70 per share quarterly dividend, I’ll repeat what I said in 2022.

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

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 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 Will History Repeat Itself for Annaly Capital? appeared first on Wealthy Retirement.

• 4 Ways to Keep Your Cool in Volatile Markets
• Investing Tips to Help You Sleep at Night

– James Ogletree, Managing Editor

A little over a year ago, I reviewed the dividend safety of Arbor Realty Trust (NYSE: ABR). It received a “B” rating.

At the time, the only issue was my expectation for declining net interest income in 2024. Net interest income is the metric we use for mortgage real estate investment trusts, or REITs, to determine whether they are generating enough cash to afford their dividends.

Arbor Realty Trust pays a whopping 14.4% yield. Let’s find out if that dividend is still safe.

Net interest income did in fact drop in 2024, from $428 million to $363 million.

This year, NII is expected to rebound to $409 million.

However, we’ve got a problem.

In 2024, Arbor paid shareholders $395 million. That’s nearly 9% more cash than it took in. In other words, for every $1 it generated in net interest income, it paid out $1.09 in dividends.

The payout ratio will likely be over 100% again this year if the company pays $435 million in dividends as I expect.

Arbor Realty Trust eliminated its dividend during the global financial crisis. But since it reinstated the dividend in 2012, the company has raised the dividend every year – often multiple times per year.

Because it has increased the dividend every year for at least 10 years, its dividend safety rating gets a one-point bonus.

The dividend appears to be a priority for management, but if the total dividend payout exceeds net interest income again, the board of directors will have some hard decisions to make.

With last year’s and this year’s payout ratios both expected to be over 100%, Arbor Realty Trust’s dividend has become less safe.

Dividend Safety Rating: C

What stock’s dividend safety would you like me to analyze next? Let me know here.

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 Arbor Realty Trust: An Update on This Popular 14% Yielder appeared first on Wealthy Retirement.

The company pays a whopping 16% yield. While the debate rages on about whether marijuana is safe, let’s see if we can settle whether Advanced Flower’s dividend is safe or in danger of being cut.

Advanced Flower’s cash flow metric is called distributable earnings. In 2023, distributable earnings fell from $49.9 million to $41.4 million. However, distributable earnings for 2024 are forecast to come in at $69.3 million – a significant improvement.

That should help the payout ratio, which has been a concern in the past. In 2023, the company paid out $42.5 million in dividends for a payout ratio of 103%. That means it paid out $1.03 in dividends for every $1 in distributable earnings.

I’m OK with REITs paying out up to 100% of their cash flow in dividends, as they are required by law to pay 90% or more of their earnings to shareholders. As a result, REITs tend to have higher payout ratios than other companies. But as long as they’re not paying out more than they’re bringing in, that’s fine.

Last year, Advanced Flower’s payout ratio dropped to a more comfortable 83%.

However, I’m not so sure about the company’s prospects for 2025. Revenue and net interest income are forecast to slip a bit, while earnings per share are expected to rise slightly. So I don’t have a feel for where distributable earnings will be at the end of the year. They probably won’t grow much, and I suspect they could be lower.

Advanced Flower has paid a dividend since 2021, but in 2023, as distributable earnings fell, it lowered the dividend. The company also paid a $0.10 per share special dividend in 2024.

Given that the company may struggle to grow its distributable earnings in 2025 – and what that would mean for the payout ratio – plus the fact that it cut its dividend in the very recent past, Advanced Flower Capital’s dividend cannot be considered safe.

Dividend Safety Rating: D

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 Could This Cannabis Stock’s 16% Yield Go Even Higher? appeared first on Wealthy Retirement.

Perhaps the fact that the stock has gone nowhere for over a year has dampened investors’ enthusiasm. But that big, juicy 15% yield still attracts income investors, so it’s time to take another look.

In January, I gave the stock an “F” rating for dividend safety because of its track record of cutting its dividend multiple times in the past decade.

The good news was that the company was projected to generate enough net interest income, or NII, to afford the dividend. (AGNC Investment Corp. is a mortgage REIT, so we use NII as our measure of cash flow to determine the health of the dividend. NII is simply the difference between the interest the company collects and the interest it pays.)

Unfortunately, AGNC was not able to deliver on that good news. In fact, its NII fell to negative territory. Not negative growth, mind you – net interest income itself was negative. That means the company lost money.

In 2023, even though its NII was -$246 million, AGNC paid investors $1 billion in dividends.

This year, Wall Street forecasts NII to “improve” to -$42 million, and the company is still expected to pay out $1 billion in dividends.

Despite our chart provocatively pointing out that AGNC makes no money, if you look at the company’s third quarter earnings release, you’ll notice that it is in fact profitable. Through the first three quarters of the year, AGNC earned $741 million.

Why the big discrepancy between earnings and NII? The biggest reason is that the earnings calculation includes $1 billion in unrealized gains on securities.

However, a company cannot pay dividends from unrealized gains. It’s like trying to pay your electric bill with stock that you haven’t sold.

This is exactly the reason I look at cash flow when examining the safety of a dividend – or NII in the case of a mortgage REIT. It strips away all the nonsense that goes into earnings and tells us how much money the company actually brought in from running its business.

Technically speaking, thanks to perfectly legal accounting gimmicks, AGNC is profitable. But its negative NII figure reveals that more money went out the door than came in.

Now, AGNC may be able to someday sell those securities, take a $1 billion gain, and use that cash to pay its dividends. But to determine a company’s dividend safety, we have to analyze its income from running its business day to day, not from one-time or irregular big gains.

So, while AGNC has some decent assets on the books, its ongoing business does not generate enough cash (or any, for that matter) to pay its $0.12 per share quarterly dividend and maintain its 15% yield.

Add to that a poor track record of cutting the payout to investors, and you have to consider the dividend extremely unsafe and a strong candidate for a cut.

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 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 Has AGNC Investment Corp.’s Dividend Gotten Any Safer? appeared first on Wealthy Retirement.

Then, in September 2021, Orchid earned itself another “F” rating in an analysis by my colleague Kristin Orman, our Research Director here at The Oxford Club. Sure enough, the company lowered its dividend four more times over the next three years.

The stock currently pays a $0.12 monthly dividend, which equates to a yield of 18%.

Can Orchid shake off the stink of its previous “F” ratings, or is another cut coming?

Orchid Island Capital is a Vero Beach, Florida-based mortgage real estate investment trust (REIT) with a portfolio worth nearly $4 billion. To determine its ability to pay its dividend, we’ll look at net interest income, or NII – the difference between how much the company earns from lending cash and the cost of borrowing the funds.

Not only has Orchid Island’s net interest income taken a nose dive… it turned negative last year. Though the company’s fundamentals are improving, net interest income is expected to be negative again this year.

That’s a big problem right off the bat. The company did not generate cash last year and is forecast to lose money again in 2024.

If that were the only strike against its dividend safety, I’d still be very concerned. It’s hard to pay the bills – and especially hard to reward shareholders – when you have no money coming in the door.

Then, of course, there’s also Orchid Island’s history of dividend cuts: 10 cuts in 10 years. If you knew nothing about the company other than its dividend-paying track record, you’d likely assume cut #11 is coming within the next year. Add on the fact that the company is hemorrhaging cash, and it is a near-certainty that it will slash its 18% yield.

Of all the “F”-rated stocks I’ve analyzed in this column over the years, I don’t believe I’ve ever seen such a sure thing. This dividend will be lower a year from now – probably much sooner.

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 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 Orchid Island Capital: A Dividend Cut Is a Near-Certainty appeared first on Wealthy Retirement.

So, if we do enter a rate-cutting environment, what stocks are likely to do well?

Here are the top three sectors I expect to outperform during this new era.

1. Real Estate Investment Trusts

Real estate investment trusts, or REITs, are companies that buy real estate properties and rent them out to tenants. But these businesses don’t just buy houses or offices. They also own retail centers, healthcare facilities… even shelf space in data centers.

A stock that I’ve held in the Oxford Income Letter portfolio for a long time – and that I still recommend – is Four Corners Property Trust (NYSE: FCPT).

A former spinoff from Darden Restaurants (NYSE: DRI), Four Corners owns a ton of restaurant real estate, much of which it leases to Darden eateries. However, the company has expanded significantly in recent years, now holding properties in auto service, medical retail, and other retail as well.

Four Corners’ adjusted funds from operations, which is the measure of cash flow used by REITs, has been steadily rising, enabling the company to hike its dividend for seven years in a row. The stock now pays a 4.6% (and growing) yield.

2. Homebuilders

There are not enough houses to meet demand in the U.S. The shortfall is staggering. It is estimated that we would need 7 million new homes in order to catch up with demand.

And demand could soon increase even more. As interest rates fall, mortgages will become more affordable. If the 30-year fixed rate mortgage (which is currently averaging about 6.3% nationwide) dips below 6%, I believe we’ll see a rush of new homebuyers – especially if Vice President Kamala Harris wins the presidency.

One of Harris’ campaign promises is a $25,000 subsidy to assist new homebuyers with their down payments and make homeownership more affordable.

So demand is set to increase strongly, while supply is still tight.

I particularly like homebuilders that are catering to first-time buyers, as first-time buyers will likely be the most ready to make the leap to a new home in the coming year.

Century Communities (NYSE: CCS) focuses on the entry-level market. In the company’s own words, this allows it to “target the broadest potential pool of customers.”

Century had a down year in 2023, which is not entirely surprising given that interest rates were rising throughout the past two years. This year, however, the company’s numbers have rebounded.

Revenue in the first half of the year grew by 24% over last year, while earnings grew 75%. Wall Street predicts robust 15% earnings growth in 2025.

The stock trades at just 10 times earnings – well below the sector median of 14.6.

It also pays a small dividend.

3. Utilities

Utilities tend to perform well when rates fall. This is because they borrow a lot of money, and falling rates mean lower interest expenses.

The chart below shows the inverse relationship between interest rates (as measured by the 10-year Treasury yield) and the performance of the S&P 500 Utilities index.

Utilities’ strong dividend yields also become more appealing as rates decline, because low rates make it more difficult to find meaningful yields elsewhere.

Duke Energy (NYSE: DUK) is based in North Carolina and delivers power to 8.4 million customers in seven states. It has one of the largest electricity transmission systems in the country.

Excluding the pandemic year of 2020, revenue has been steadily growing since 2018. This year, profits are on pace to be the highest they’ve been in at least a decade.

This is a very well-run company that sports a 3.5% yield.

Generally speaking, falling rates are good for the stock market, and I expect these sectors and individual stocks to do particularly well.

The post The Top Stocks to Own as Interest Rates Fall appeared first on Wealthy Retirement.

But today, he’s writing about something a bit different: the proven portfolio-packing power of dividend stocks.

Anthony also contributes to each monthly issue of The Oxford Income Letter, where he’s recently written fascinating pieces on the trillion-dollar wall of mounting corporate debt, why bond buyers should keep their maturities short and three dividend-paying stocks that are undervalued at current prices.

If you aren’t yet subscribed to The Oxford Income Letter, go here to learn more about its mission and how to become a member today.

– James Ogletree, Managing Editor

Stock investing is one of the best, most proven approaches to building personal wealth. Over the long haul, few other asset classes can boast the performance that stocks have delivered.

It’s quite a marvel when you consider the speculative nature of it all.

Basically, stock investors risk capital today in the hopes of capturing a big reward sometime in the future. There’s no money-back guarantee (as you have with bonds) or other safety net (like the FDIC insurance you get on bank deposits) to prevent unexpected losses.

Buying a stock, even the safest stock you can imagine, is essentially a bet.

This is why many long-term investors turn to dividend-paying stocks. Not only do these stocks pay you to own them – generating income in the near term – but they’re also among the best stocks to own in general.

The Lifeblood of an Income Portfolio

Dividends are income paid to shareholders. In addition to interest-bearing bonds – or other income-generating assets such as real estate investment trusts (REITs) – dividend-paying stocks are often the lifeblood of an income investor’s portfolio.

According to data from YCharts, approximately one-fifth of all stocks listed on major U.S. exchanges have paid a dividend over the past 12 months.

But not all dividends are created equal.

Many companies pay them sparingly. So a dividend paid last quarter doesn’t guarantee that another will be paid this quarter.

That makes frequency of payments a key factor in differentiating between low- and high-quality dividend-paying stocks. The best ones typically pay their shareholders on a regular schedule – whether annually, quarterly or even monthly.

However, the amount of the payout matters too.

Getting paid a penny per share might be better than getting paid zilch. But for investors who are mainly looking to get paid for owning the stock, a tiny dividend isn’t worth their time.

A simple way to gauge the size of a stock’s dividend is its dividend yield, or its dividend per share (on an annual basis) divided by its price per share. For example, if a stock valued at $100 pays a dividend of $3 per share, its dividend yield is 3%. If the stock price falls to $50, the dividend yield rises to 6%.

Yes, decreasing share prices lead to increasing dividend yields.

This makes dividend stocks one of the few assets that see their perceived values rise as their share prices fall. That, in turn, makes them increasingly attractive to shareholders.

At face value, most dividend payers might seem to trade at low dividend yields. But yields fluctuate depending on both the stock’s price and the amount paid out per period.

However, while yields fluctuate based on price, the payout for a high-quality dividend stock is consistent.

You shouldn’t have to guess when or what your next payout will be. So if you buy a stock with an annual dividend of, say, $5 per share, you should be able to feel confident that you’ll collect that $5 per share for years to come.

But in the very best-case scenario, that dividend should increase over time, causing the yield on your principal to rise.

In fact, you may be familiar with a group of stocks that are celebrated for their continual dividend increases…

Stock Market Nobility

Stocks with 25 or more consecutive years of dividend growth, commonly called “Dividend Aristocrats,” reign supreme in the stock market. And it’s not hard to see why.

A company that’s willing and able to pay a growing dividend for years or even decades on end is highly prized and sought after in the market – and not just for the payouts.

A consistently rising dividend signals strong underlying financials too.

As you can see below, the Dividend Aristocrats have outperformed the S&P 500 over the past 30-plus years.

Compared with their non-dividend-paying peers, these are the real rainmakers in the stock game. And by reinvesting the dividends – that is, using them to purchase more shares – you can supercharge the stocks’ performance over the long term.

Even more importantly, you can use these high-quality dividend payers to help craft the perfect all-weather stock portfolio.

Not only have they proved able to deliver strong, long-term growth to a portfolio, but they can also provide stability thanks to their dividend payouts and their increased appeal during bear markets or recessionary periods.

The post Dividend Stocks: The Lifeblood of Your Income Portfolio appeared first on Wealthy Retirement.

In this week’s episode of his YouTube series State of the Market, Chief Income Strategist Marc Lichtenfeld takes on one of investors’ most dreaded nemeses… taxes.

When it comes to dividend investing, it’s crucial to understand how dividend taxes vary from investment to investment – because your wealth protection strategy should change accordingly.

As Marc says in this week’s video, “Uncle Sam treats various types of dividends differently.”

For instance, qualified dividends – the kind paid by most companies – are not taxed at all for single filers earning $40,400 or less or for joint filers earning $80,800 or less.

The rates go up for those earning more, including an additional 3.8% tax on dividends for single filers with incomes of more than $200,000 or joint filers making more than $250,000.

But “ordinary,” or nonqualified, dividends are different – and so are some of our favorite income investing vehicles here at Wealthy Retirement: real estate investment trusts (REITs) and master limited partnerships (MLPs).

There also are important differences depending on whether you hold your dividend payers in taxable or tax-deferred accounts.

Marc always recommends talking with a tax professional who can speak to your specific situation.

But before you do, be sure to watch this week’s video so you’re armed with the information you need to save every penny you can.

Click here to watch.

Good investing,

Mable

The post Know Your Dividend Tax Policies appeared first on Wealthy Retirement.