If you’ve ever toyed with the idea of owning rental property, coming to grips with the capitalization rate – or “cap” rate – is crucial. This metric, calculated by dividing a property’s net operating income by its asset value, offers a snapshot of potential yield.
For instance, a property valued at $1 million that generates $36,000 annually in rent has a cap rate of 3.6%. This figure is vital as it essentially represents your expected yearly cash flow from the investment. However, securing a favorable cap rate is just the beginning. It doesn’t cover or account for some unique risks associated with real estate investing.
Liquidity – or the lack thereof – is a significant factor; real estate isn’t quickly converted into cash without potentially substantial losses. Regular maintenance and repairs can also erode profits, as can taxes and the costs associated with leverage, which typically stems from mortgages.
Enter real estate investment trusts (REITs). Imagine consolidating the benefits of property ownership into a legal entity, dividing it into shares and listing them on an exchange. This is precisely what a REIT does, and according to the National Association of REITs (Nareit), there are about 225 of them available on major exchanges.
“REITs are companies that own, operate or finance income-generating real estate properties,” says Rohan Reddy, head of international business development and corporate strategy at Global X ETFs. “They are required to distribute at least 90% of their taxable income to shareholders, which makes them a popular choice for investors seeking regular income.”
While the income from REITs might not enjoy the same tax efficiency as qualified stock dividends, their yields are generally higher than the broader market. “Overall, REITs are currently paying a yield that is nearly three times the dividend on the S&P 500 – plus the potential for capital appreciation,” says Abby McCarthy, senior vice president of investment affairs at Nareit.
So, rather than doing cap-rate calculations, increasing your income from real estate investments could be as straightforward as selecting the highest-yielding REITs. But caution is advised: Sometimes, a high-yielding REIT can be financially distressed.
“Investors need to be very careful with high-yield REITs,” warns Sam Adams, CEO and co-founder of Vert Asset Management. “Some could be considered high yield simply because their stock price has fallen so much that the dividend yield looks high.”
Here are eight high-yield REITs to buy today:

Realty Income Corp. (O)

Realty Income is one of the few REITs in the illustrious S&P 500 Dividend Aristocrats index, which requires at least 25 consecutive years of dividend increases. The company is also known as being part of a handful of REITs that choose to pay dividends on a monthly basis instead of quarterly. Currently, Realty Income is paying a monthly dividend of $0.2635 per share, representing a 4.9% annualized yield.
What makes or breaks a REIT is the quality of its tenants, and Realty Income doesn’t disappoint here. Most of its clients hail from more durable retail-facing segments like grocery stores, convenience stores, dollar stores and pharmacies. The less cyclical nature of these tenants has helped Realty Income maintain a high occupancy rate and increase its dividend by an annualized 4.3% since its listing on the New York Stock Exchange, outpacing inflation.

National Storage Affiliates Trust (NSA)

“Investors may be able to achieve the best of both worlds by selectively prioritizing defensive segments of the real estate market, which are both resistant to a slowing economic environment while still maintaining exposure to the potential tailwinds that often come with falling rates,” Reddy notes. One unique REIT to watch here is National Storage Affiliates, which currently yields 5.1%.
Unlike more economically sensitive REITs that depend on robust consumer spending and business travel – such as those in hospitality or experiential sectors like dining and shopping – self-storage has counter-cyclical sensitivity. For instance, during the COVID-19 pandemic, S&P Global Inc. (SPGI) found that self-storage REITs saw a spike in demand as students sought temporary storage for dorm contents.

Annaly Capital Management Inc. (NLY)

“Given the leveraged business models of real estate, REITs are poised to benefit from continued rate cuts from the Federal Reserve. The lower borrowing costs that accompany falling interest rates and easing inflation pressures both serve as strong catalysts for real estate returns,” Reddy says. The most leveraged REITs tend to be mortgage REITs, which don’t actually hold physical real estate.
Annaly Capital Management stands as a prominent example, managing a portfolio valued at about $82 billion, predominantly composed of mortgage-backed securities (MBS). Annaly’s strategy involves borrowing funds at short-term rates and investing in long-term securities, which typically have higher yields. The firm’s ability to leverage this spread effectively is key to achieving its high yield of 13.2%.

AGNC Investment Corp. (AGNC)

Unlike Annaly, which holds some commercial MBS, AGNC’s portfolio is primarily residential MBS guaranteed by U.S. government agencies such as Fannie Mae, Freddie Mac and Ginnie Mae. These guarantees offer a layer of security, as they are backed by the federal government, reducing the credit risk associated with the loans. Currently, AGNC pays a high 14.4% yield with monthly payouts.
AGNC follows the typical mortgage REIT strategy by borrowing money at short-term interest rates to invest in longer-duration, higher-yielding residential MBS. Consequently, in environments where interest rates are falling, mortgage REITs like AGNC typically benefit as their cost of borrowing decreases while the yield on their existing investments remains relatively stable, enhancing their overall margins.

W.P. Carey Inc. (WPC)

REITs enjoy considerable flexibility in structuring their operations, and one prominent type is the “net lease” REIT. These entities lease properties under agreements where the tenant is responsible for most or all property expenses, including maintenance, taxes and insurance, which stabilizes income for the REIT and reduces operational risks. A prime example of a net lease REIT is W.P. Carey.
W.P. Carey specializes in sale-leaseback transactions, a strategy where businesses sell their real estate and then lease it back under long-term agreements. This arrangement allows companies, such as those operating warehouses and distribution centers, to convert their property assets into liquid working capital while maintaining operational control over the facilities. W.P. Carey pays a 5.9% yield.

Omega Healthcare Investors Inc. (OHI)

“Omega Healthcare Investors’ long-term, triple-net lease structures have helped shield it from some of the negative forces impacting the real estate sector,” Reddy says. “Built-in annual rent escalators on its agreements have helped its leases keep pace with inflation.” In short, tenants are responsible for all property expenses including taxes, insurance and maintenance, and lease payments adjust for inflation.
Omega’s vast network, encompassing 900 properties in the U.S. and U.K. managed by 77 operators and offering over 86,000 beds, makes it a leader in this REIT sub-industry. The diversity of its facilities, including skilled nursing, assisted living, independent living, rehabilitation and acute care, positions it well to benefit from the aging-population trend. Investors can currently expect a 6.4% dividend yield.

Sabra Health Care REIT Inc. (SBRA)

“Long-term-care facilities comprise a historically stable sector of the real estate market, which has held up well in the backdrop of market volatility,” Reddy says. “This can be attributed to increased investor interest in alternative asset classes and strong secular tailwinds from an aging population.” Another long-term-care facility REIT to watch is Sabra Healthcare REIT, which currently yields 6.3%.
Some long-term-care REITs, such as Medical Properties Trust Inc. (MPW), have suffered recently from shaky financials, but not Sabra. The firm boasts better net-debt-to-adjusted-EBITDA and interest-coverage ratios than its peers and maintains considerable liquidity of about $900 million on the balance sheet, with another $455 million available thanks to an at-the-market equity offering program.

Apple Hospitality REIT Inc. (APLE)

If you aspire to mimic the hotel magnates of past eras, investing in companies like Marriott International Inc. (MAR), Hilton Worldwide Holdings Inc. (HLT) and Hyatt Hotels Corp. (H) is an avenue. These companies primarily manage and operate hotel properties. This model allows these companies to focus on hospitality services, marketing and brand management.
However, if your interest lies in gaining exposure to the actual properties these famous hotel brands occupy, Apple Hospitality REIT should be on your radar. APLE owns a diverse portfolio of properties, including those branded under Marriott, Hilton and Hyatt. Currently, Apple Hospitality REIT offers a 6.4% dividend yield and stands out as one of the few REITs that pay on a monthly basis.