Real Estate Investment Trusts, also known as REITs, are a type of stock market investment that provides one thing in spades: income. This is because they must distribute at least 90% of their earnings to shareholders to maintain their tax-advantaged status.
Additionally, their stock prices can appreciate significantly, offering the potential for a mixture of both dividends and growth. As their earnings increase, they can often also increase the amount they pay out as dividends. These three REITs are offering investors at least 5% dividend yields, and analysts project at least 15% increases in their adjusted earnings per share (EPS) for fiscal 2025.
Realty Income: The Monthly Dividend Company
First is Realty Income Corporation (NYSE: O). The real estate company offers a strong dividend yield of 5.2%, and analysts expect its adjusted EPS to grow by 21% in 2025. The company owns and manages freestanding commercial properties and is in the top 10 largest REITs in the U.S. by market capitalization.
It differentiates itself when it comes to returning capital to investors by paying dividends every single month rather than quarterly. This gives the investor increased utility in how they want to use their dividends as they get access to them sooner. However, they must also be more on top of reallocating their dividends to make sure they are fully invested. Realty Income offers a dividend reinvestment program, or DRIP, where it will automatically reinvest the dividends back into more shares if the investor chooses.
The twelve-month average price target for Realty Income predicts some moderate upside in the stock of 8%. However, analysts over at UBS Group are particularly bullish. Their $72 price target implies an upside of 19%. Another positive factor for Realty Income is that the company has a consistent track record of raising its dividend. It has done so for over 25 consecutive years, allowing it membership in the S&P 500 Dividend Aristocrats.
Park Hotels: Luxury Hotel REIT With A Chance For Big Dividend Spikes
Next is Park Hotels and Resorts (NYSE: PK). The company owns and manages a real estate portfolio of upscale hotels, many of which are under the Hilton brand. Hilton actually spun off a portfolio of properties back in 2017, which is now Park Hotels and Resorts. It hasn’t been a great year for the firm, with shares providing a total return of -4%.
If the company’s Q4 results come in as expected, it will have seen a moderate revenue decline of 3% over the year. However, analysts expect revenue growth to turn slightly positive again in 2025 and 2026. Analysts expect adjusted earnings per share to grow much more rapidly at 60% in 2025 and 15% in 2026.
Additionally, the company’s next twelve months' dividend yield, a forward-looking measurement, is predicting massive income for investors. The number sits at 9%, which, although big, is significantly smaller than the yield over the last twelve months. That number sits at over 17%. This absurdly high number is due to a 77-cent special dividend the company paid at the end of 2023 in addition to the especially large 93-cent quarterly dividend. The company also did this back in 2018. Although, more often than not, these massive dividend spikes don’t occur, their possibility is a perk of this REIT.
Crown Castle: Specialized Telecom REIT With Earnings Projected to Recover
Last is Crown Castle (NYSE: CCI). It is a specialized REIT, as it owns, operates, and leases communication infrastructure. Specifically, it collects revenue through leasing its towers and fiber optic lines to some of the largest telecom companies in the world. T-Mobile (NASDAQ: TMUS), AT&T (NYSE: T), and Verizon (NYSE: VZ) together accounted for around 70% of total revenues in 2023.
It has also struggled in 2024, providing investors with a total return of -2%. If its Q4 financials align with estimates, its adjusted EPS will have dropped 37% from the previous year. However, it is projected to recover in 2025, with adjusted EPS expected to grow by 18%, based on the average of 11 analyst forecasts. Analysts predict the figure will continue to rise in the foreseeable future after 2025.
The firm’s dividend yield of 5.8% shows its notable income-providing potential. The company also has a consistent track record of raising its annual dividend; it has done so every year since 2015. In 2024, it's on track to equal its annual dividend from 2023 unless it raises its payout in Q4.
