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Three REITS for Safety and Yield

04/27/2017 2:50 am EST

Focus: REITS

Tim Plaehn

Investment Research Analyst, Investors Alley

Marrying safety and yield, these three stocks are perfect examples of the kinds of investments you will need in retirement, explains Tim Plaehn, editor of The Dividend Hunter.

Their safe cash flows and large dividend payments mean that you can live off the income and not worry about the money running out.

Most dividend stocks will continue to pay right through a market correction or bear market and dividend investors are not forced to sell shares at the worst possible time just to have money to pay the bills.

I recommend that investors always reinvest at least a portion of their dividend income, even if in retirement and drawing a cash income to fund a lifestyle.

As examples, here are three stocks that yield at least 8%. You could draw a 6% income and if you use the other 2% to buy more shares to give yourself a raise every year.

Starwood Property Trust (STWD) is a real estate investment trust (REIT) that makes mortgage loans on commercial properties.

Starwood went public in 2009 and is now one of the largest commercial mortgage lenders in the country. The STWD dividend has been increased several times and never reduced. The stock yields 8.5%.

Blackstone Mortgage Trust (BXMT) is another commercial mortgage REIT, with a business model similar to Starwood Property Trust. This REIT is managed by the Blackstone Group, global alternative asset manager.

Blackstone Mortgage benefits from first look or exclusive lending opportunities provided by the parent company. BXMT currently yields 8.0%.

Uniti Group (UNIT) is a two-year old, very unique REIT. The company was spun off by a major telecom service provider, Windstream Holdings (WIN) and owns a fiber and copper line network leased back to Windstream.

Since the IPO, Uniti has been acquiring addition fiber and cell tower assets to diversify its revenue stream. Currently 25% of cash flow comes from the acquisitions. UNIT yields 9.1%.

Owning dividend stocks with secure and growing cash flows like the three above allows me and my subscribers to stop worrying about the daily gyrations of the stock market.

Instead, we earn consistent returns, paid in the form of cash. It’s so easy, all you have to do is buy shares in the stocks that I recommend and watch as they deposit money into your brokerage account multiple times a month.

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