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Last week, the release of the April 30-May 1 Federal Reserve (FED) minutes showed that FED officials were concerned that the economy isn’t closer to the FED’s 2% inflation target goal due to its lack of progress in recent months. Some officials expressed reluctance to reduce rates soon, with a few considering another rate increase.

Bad news on inflation tends to hit interest rate-sensitive stocks such as real estate investment trusts (REITs) hard and this week was no exception. Over the past five trading days, over 80% of all REITs have lost ground, with many down 5% or more.

However, REIT investors are often willing to withstand the volatility of stock prices in exchange for the ability to buy these income producers when dividend yields rise. Here are three REITs that have sold off this week and now have dividend yields, especially compared with their 5-year averages:

Realty Income

Realty Income Corp (NYSE:O) is a San Diego-based, triple-net lease REIT with over 15,450 properties across 89 industries and over 1500 tenants worldwide. The “Monthly Dividend Company,” as it calls itself, is a member of the S&P 500 and an S&P 500 Dividend Aristocrat, meaning it has paid and raised its dividends consistently for at least 25 years. Realty Income has increased its dividend for 107 consecutive months and 125 times since its IPO in 1994.

Recent positive events include:

On May 6, Realty Income reported its first-quarter 2024 operating results. FFO of $1.05 beat the consensus estimate of $1.04 per share. Revenue of $1.26 billion topped the consensus estimate of $1.10 billion. But more notably, Q1 2024 revenue was 33.4% above $865.71 million in the first quarter of 2023.

Realty Income also reaffirmed its full-year 2024 adjusted funds from operations (AFFO) guidance of $4.13-$4.21.

On May 17, Realty Income raised its monthly dividend by 2.1% from $0.2570 to $0.2625 per share, increasing the annual dividend from $3.084 to $3.150 per share. This was the 647th consecutive monthly dividend paid by Realty Income, a record unmatched by any other REIT. The dividend is payable to shareholders on June 14 as of June 3.

On May 20, BMO Capital analyst Eric Borden raised the price target on Realty Income from $57 to $58. Two weeks earlier, Borden maintained a Hold rating on the stock. 

Despite these positives, Realty Income has lost 5.22% over the last five trading days. The dividend yield is 6.02%, well above its five-year average of 4.55%. Realty Income is down 8.93% year-to-date, which might be a good time for investors to add to preexisting positions.

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Highwoods Properties

Highwoods Properties Inc. (NYSE:HIW) is a Raleigh, NC-based office REIT that owns, develops, acquires, leases and manages properties in the Southern cities of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Tampa and Richmond. It was founded in 1978 and had its IPO in 1994.

Highwoods owns 27.6 million square feet of office space, with an occupancy rate of 88.5% as of March 31. Its tenant base is well-diversified by industry, with its top 10 tenants including Bank of America, the Federal Government, Met Life, Bridgestone Americas, and PPG Industries. The company also owns approximately 120 acres of land parcels.

On April 23, Highwoods Properties reported its first-quarter 2024 operating results. Funds from operations (FFO) of $0.89 per share were in line with analysts’ estimates but below its FFO of $0.98 per share in Q1 2023. Revenue of $211.275 million topped the street estimate of $206.784 million but slightly decreased from $212.752 million in Q4 2022.

On May 6, Deutsche Bank analyst Omotayo Okusanya maintained a Buy rating on Highwoods Properties and raised the price target from $28 to $31.

Office REITs have been hit hard whenever the FED hints at or raises interest rates. Highwoods has lost 5.63% this week. The dividend yield is now 7.90%, well above its five-year average of 5.91%. Year-to-date, Highwoods has a total return of 12.91%. 

NewLake Capital Partners

NewLake Capital Partners (OTC:NLCP) is an internally managed specialized industrial REIT in New Canaan, Conn., with 31 properties totaling 1.6 million square feet across 12 states. Newlake Capital Partners specializes in triple-net leasing to cannabis companies and provides capital when necessary.

Newlake was founded in 2019 and had its IPO in August 2021. Its tenants include some of the largest companies in the cannabis industry, such as Curaleaf, Cresco Labs and Truelieve. As of March 2024, it had a 100% occupancy rate, with an average of 14.3 years remaining on its lease terms and 2.6% annual rent escalations on 15 to 20-year lease terms.

On March 11, NewLake announced its Q4 operating results. Funds from operations (FFO) of $0.51 beat the estimates of $0.45 and exceeded its FFO of $0.48 in Q4 2022. Revenue of $13.02 million beat the projection of $11.41 million and topped Q4 2022 revenue of $12.18 million.

Additionally, on March 11, Newlake Capital Partners raised its quarterly dividend from $0.40 per share to $0.41 per share.

On April 2, the Florida Supreme Court approved an initiative to legalize recreational marijuana in Florida through a referendum on the November ballot. Newlake has one property leased to Curaleaf Holdings in Florida and will benefit from it if the referendum is passed. Several other Newlake tenants f also have a presence in Florida.

More good news for cannabis companies came on May 1 when the U.S. Drug Enforcement Administration (DEA) was said to be moving toward reclassifying marijuana from the Schedule I group to the less regulated Schedule III group. The White House Office of Management and Budget still needs to review the proposal, followed by another review by an administrative judge.

Over the past five trading days, NewLake has lost 2.64%. Its current annual dividend yield is 8.18%. NewLake has only paid dividends since September 2021, with its yearly trailing dividend yield of 5.89%.

NewLake Capital Partners has a total year-to-date return of 26.48%.

Check Out These 3 High-Yield Alternative Real Estate Plays

The current high interest rate environment has been hard on publicly traded REITs, but it also presents a unique opportunity to capture extraordinary yields from private market investments. Check out these three high-yield offerings with yields between 7% – 12%.

The Arrived Private Credit Fund simplifies investing in short-term financing for real estate projects, providing attractive yields secured by quality residential real estate. With target annualized dividends of 7-9%, quarterly liquidity and a diversified pool of real estate-backed loans, this fund is an excellent complement to equity investing. The fund has a low minimum investment of $100 and is available to all investors. Click here to learn more about the Arrived Private Credit Fund.

The Ascent Income Fund targets stable income from senior commercial real estate debt positions, offering a compelling yield backed by real assets. With a historical distribution yield of 12.1%, payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. For a limited time, first-time investors with EquityMultiple can invest in the Ascent Income Fund with a reduced minimum of just $5,000. This offering is available to accredited investors only. Click here to learn more about the Ascent Income Fund.

Basecamp Alpine Notes from EquityMultiple offer another powerful short-term cash management tool, with a target APY of 9% over a 3-month term and a minimum investment of only $1,000. These notes provide high liquidity and compelling rates with compounding interest, making them an ideal choice for investors looking to build their income-generating portfolio. As a special offer, Basecamp Alpine Notes are exclusive to first-time investors on the EquityMultiple platform, giving new investors a unique opportunity to take advantage of these favorable terms. Alpine Notes are available to accredited investors only. Click here for more details about Basecamp Alpine Notes.

This article REITs Got Clobbered Last Week: 3 With Attractive New Yields originally appeared on Benzinga.com