A real estate investment trust (REIT) can be a safe place to invest your money. Since it collects rent and has to pay out 90% of its profits back out to investors, it can provide a lot of stability. And now that the pandemic is less of a concern for the economy as it returns to normal, there’s a bit less risk that tenants are unable to pay rent.
A good REIT to consider right now is CareTrust REIT (NASDAQ:CTRE). It pays a quarterly dividend of $0.265, which yields right around 6%. Shares of the REIT have been down 22% this year, which has pushed its yield higher than it normally is. On a $25,000 investment, you could be collecting $1,500 per year in dividends from this stock.
And the healthcare-focused REIT looks safe right now, reporting that for the period ending Dec. 31 it collected 100% of its contractual rents. Its normalized funds available for distribution (FAD) was $0.41. Based on FAD, CareTrust’s payout ratio is very sustainable at 65%.
The company is also looking for ways to strengthen its business by assessing operators and replacing risky ones that could cause problems in the future. CEO Dave Sedgwick stated that, “we intend to take advantage of the sellers’ market, redeploy any proceeds in new investments underwritten for today’s realities, and use this time to upgrade the risk profile of our growing portfolio.”
For income investors, CareTrust may be a solid option for recurring dividends. Its business looks stable and its yield is top notch, well above the S&P 500’s average payout of 1.3%.