MW Only six dividend stocks pass a screen for quality - with yields up to 6.58%
By Philip van Doorn
Income-seeking investors need to look beyond yields to reduce the risk of suffering dividend cuts
Real-estate investment trusts have tax advantages that require them to distribute most of their profits to shareholders. These stocks are generally considered by investors to be dividend plays. And that means that if you are looking to generate income from REITs within your investment portfolio, you need to be careful. Dividend cuts can wreak havoc with share prices.
Rather than focus on high-yielding REITs when we screened the sector nearly a year ago, we followed the suggestions of Lewis Altfest, chief executive of Altfest Personal Wealth Management in New York, who warned that if a stock has a very high dividend yield, "there is something going on." The yield is high because the share prices are low - investors have anticipated a dividend cut by shying away.
Over the past year, the real-estate sector of the S&P 500 SPX has returned 5.5%, compared with a 14.2% return for the full index, both with reinvested dividends, according to FactSet. It is time to screen the REIT sector again.
Share price movements for REITs as a group can be influenced by interest rates in a manner similar to bond prices. When interest rates decline, their prices tend to rise and vice versa. Since we published the previous REIT screen in August, the Federal Open Market Committee cut its target range for the federal-funds rate three times - in September, November and December - to its current range of 4.25% to 4.50%. But REIT prices have reflected what has happened on the other end of the yield curve. Early on Friday, 10-year U.S. Treasury notes BX:TMUBMUSD10Y were trading at a yield of 4.45%, up from 3.89% on Aug. 19, when the previous REIT screen was published.
The new REIT screen
Starting with 168 REITs in the Russell 3000 Index RUA, we narrowed the list in various ways. This is a broad look at the sector - the Russell 3000 is designed to represent about 98% of publicly traded U.S. common stocks by market capitalization.
Investors will naturally be interested in REITs with high dividend yields, but the screen is designed to highlight companies that appear to have dividends well covered, and might even be able to raise their payouts.
Within the REIT industry, the non-GAAP metric called funds from operations (FFO) is typically used to gauge a company's cash flow that is available for dividends. FFO adds depreciation and amortization (noncash figures) back to earnings while netting out gains on the sale of property. Going further, adjusted funds from operations, or AFFO, nets out the costs to maintain properties that REITs rent out.
So we can compare a REIT's projected AFFO yield, based on consensus estimates among analysts polled by FactSet and current share prices, to its current dividend yields. This will show us whether or not the analysts see AFFO "headroom" above REITs' dividends.
But we went further with the screen. Here is how we narrowed the list from 168 REITs to a select group of six.
-- To reflect a variety of opinions in the estimates, we cut the group to 116 REITs covered by at least five analysts polled by FactSet, for which consensus AFFO estimates were available for 2026.
-- Then we cut the group to 111 REITs with current dividend yields of at least 1.00%.
-- Among those 111 REITs, 96 have indicated 2026 AFFO headroom of at least 1.00% above their dividend yields.
-- Since Altfest suggested steering clear of any REITs that had been showing declines in revenue, we screened out any seeing sequential or year-over-year declines in their most recently reported quarterly revenue per share of at least a penny, which brought us down to 48 companies.
-- Keeping in mind that depreciation and amortization are added back to earnings as part of AFFO calculations, Altfest raised the question of whether or not these adjustments accounted for more than half of a REIT's dividends. So we cut the list further to remove any companies for which depreciation and amortization made up more than half the dividends paid over the past four quarters. This cut our remaining list to six REITs.
Here are the six REITs that passed screen, sorted by dividend yield:
REIT Ticker Current dividend yield Estimated 2026 AFFO yield Estimated headroomInvestment concentration Gaming and Leisure Properties Inc. GLPI 6.58% 8.49% 1.91%Casinos and casino hotels Four Corners Property Trust Inc. FCPT 5.40% 7.02% 1.62%Restaurants and retail VICI Properties Inc. VICI 5.27% 7.39% 2.12%Casinos and casino hotels National Health Investors Inc. NHI 5.13% 7.17% 2.04%Senior housing and medical CubeSmart CUBE 5.09% 6.17% 1.08%Self-storage properties CareTrust REIT Inc. CTRE 4.42% 6.50% 2.08%Senior housing and medical Source: FactSet
Click on the tickers for more about each company.
Read: Tomi Kilgore's detailed guide to the information available on the MarketWatch quote page
Four of the six REITs passed last year's screen. The two additions to the list are Four Corners Property Trust (FCPT) and CareTrust (CTRE).
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-Philip van Doorn
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July 18, 2025 09:15 ET (13:15 GMT)
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