High-dividend REITs: The Best REITs for Reliable Income for 2023

Team Veye | 09-Oct-2023 high dividend reits australia

Investments in equity are risky due to their high deviation nature; the reason being, most conservative investors flock towards less risky investments with consistent, high-ASX dividend-paying REITs.

Some of the high-dividend-paying REITs include Centuria Office REIT (ASX: COF), which has a one-year annual dividend yield of approximately 11.42% and a market cap of $737.71 million (as of September 6, 2023). Another company called Growthpoint Properties Australia (ASX: GOZ) has a one-year dividend yield of 8.92% and a market cap of $1.81 billion (as of September 6, 2023). Dexus Convenience Retail REIT (ASX: DXC) provided a one-year dividend yield of 8.54% with a market cap of $348.52 (as of September 6, 2023).

High Dividend Reits Australia

Let’s understand what a dividend is in general. A dividend is a portion of a company’s profits after tax that is distributed to common shareholders either in the context of interim dividends, quarterly dividends, or the final dividend at the financial year's end. Some businesses would reinvest their profits to fuel further expansion, while others may not generate enough earnings to warrant a distribution to shareholders. To identify the top dividend-paying REITs in Australia, investors should examine factors that signal long-term income potential. Investors generally overhaul companies with consistent dividend growth, reflecting management’s confidence and commitment to shareholders. Real estate investment trusts, or REITs," facilitate individual investors investments in large, integrating, sprawling income-generating real estate assets, which generally have a tendency to provide good dividends due to their high income potential on asset value appreciation.

Frequently Asked Questions F.A.Q

Is investing in REITs a viable strategy for dividend income?

Investing in REITs for the purpose of paying dividends can be a good strategy, provided a particular REIT's stock provides a good dividend yield over time. Dividend stocks provide capital growth through dividend income as well as stock appreciation.

Why shouldn't you invest in REITs?

One must understand that REITs do not come risk-free. Variability in the returns may also be very high. REITs can be very sensitive to interest rate risk and have income tax implications as well. Fees can impact the real return. REIT stocks have drastically fallen during the pandemic. Post-2022, these REITs have demonstrated knee-jerk reactions upon the onset of the Russian-Ukrainian war.

Is investing in REITs safer than stocks?

Risk is almost always present in every investment, directly or indirectly. REITs are less risky in general compared to investments in stocks, both in the medium and long term. REITs allocation of funds to premium real estate properties has the potential to generate good returns; obviously, during a heavy crisis, there is no escape. Benefits are always there in regular, systematic, and long-term investment.

What are the risks involved in REITs?

The numerous risk factors associated with investing in REITs include leverage risk, liquidity risk, and market risk.

How long do I have to own shares in a REIT?

Investment in REITs is something someone should consider for long-term investment purposes. The exchange-traded REITs normally fluctuate with the stock market. For property value to grow at a decent rate, it might take at least three years; therefore, holding for three years could be meaningful for share appreciation. Most importantly, always buy at a reasonable price to enjoy the return benefit when it appreciates.

Is it worth it to invest in REITs?

Investing in REITs can be worth considering as part of a diversified investment portfolio. Investments in REITs offer a number of ways for individual investors, such as diversification and steady income, to gain exposure to real estate assets without owning or managing properties.

What are the advantages of investing in a REIT?

There are numerous benefits to investing in REITs that make them an attractive choice for investments, such as dividend income, diversification, liquidity, professional management, accessibility, potential for capital appreciation, and an inflation hedge.

Do REITs do well in a recession?

Sectors like residential, healthcare, and essential retail properties tend to be more resilient, as they provide essential services that are in demand even during economic downturns. On the other hand, sectors like hospitality, office, and commercial retail properties may face more challenges during the recession due to decreased demand.

Can you invest in multiple REITs?

Investing in multiple REITs is a common strategy to diversify risk and exposure within the real estate sector. By investing in different REITs with properties across various sectors, geographic locations, and property types, someone can establish their investment across a range of assets.

Are dividend stocks a good hedge against inflation?

Inflation causes the prices of goods and services to rise, leading to a decrease in purchasing power parity. Dividend yields can reduce the somewhat inflationary effect by providing a reliable income source that can potentially increase over time. Moreover, some companies pay attractive dividends to maintain ‘investors’ confidence.

Do REITs do well in inflationary times?

REITs might have significant potential to perform well during inflationary times due to rising property values. Property values rise as the value of the underlying assets rises, which in turn benefits REITs as investors own and operate income-generating properties.


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