REITs Raining Cash: 3 “Super-High-Yield” REITs for 2024

If the promise of yields as hefty as 25.4% piques your interest, then get ready to embrace one of the market’s best-kept secrets: Super High-Yield REITs. 

Real Estate Investment Trusts (REITs) have emerged as a formidable force, casting a spotlight on real estate’s potential for generating outstanding returns. For those who are unacquainted, REITs are entities that own or finance income-generating real estate across a range of sectors. 

Of course, not all REITs are created equal.

My focus in this article is to unravel the cloak of obscurity around those particular REITs that drive in the stratosphere of returns.

Allow me to unveil the entire profiles of 3 REITs that are raining cash.

Again, I’m talking about yields like 15.9%, 18.5%, and even 25.4%.

These high-performing REITs may vary from sector to sector, but what they all share in common is staggering yields that are too good to bypass. 

  • Ellington Residential Mortgage REIT (EARN), yielding an impressive 15.9%
  • ARMOUR Residential REIT (ARR), garnering a sky-high yield of 25.4%
  • Orchid Island Capital Inc (ORC), holding strong with a yield of 18.5%

The truth of their potential is best understood when we examine their performances in detail. So, let’s dive into these super high-yield REITs, outlining why they are compelling opportunities for investors who crave high yield and, more importantly, why I am utterly impressed by their performance.

Let’s begin our exploration with the first: Ellington Residential Mortgage REIT (EARN), showcasing an astonishing yield of 15.9%. Bearing in mind the average S&P 500 company has a yield of just under 2%, the appeal of EARN becomes evident. But what’s truly outstanding is not merely the yield—it’s the stability. EARN invests in and manages residential mortgage-backed securities, making the earnings somewhat predictable. 

And our second heavyweight, ARMOUR Residential REIT (ARR), we see a jaw-dropping yield of 25.4%. The question immediately arises, “How does it manage such a high yield?” The answer lies in its strategic investment in Federal agency securities. As a REIT, it is required to distribute 90% of its taxable income to shareholders, resulting in a high yield and regular dividends. But it’s not an overnight spectacle. ARR is a veteran in the mortgage space, and their strategy of investing heavily in residential mortgage-backed securities is a time-proven one that has led to these impressive yields. 

Our third contender, Orchid Island Capital Inc (ORC), with a yield of 18.5%, completes our high-yield trifecta. Another player in the residential mortgage-backed arena, ORC manages a diversified risk profile, actively hedging against fluctuations in interest rates. Given today’s volatile market conditions, the balance between risk and reward that ORC maintains is very appealing. The company’s dedication to strategic growth has resulted in consistently high yields. 

I’ve handpicked these companies because they impressively combine high earnings with the stability that only seasoned strategies provide. In an environment where yield is becoming an elusive attribute, these REITs stand as robust financial pillars, successfully leveraging the real estate market to maintain substantial returns for their investors. Yet, every investor must gauge their risk tolerance and investment horizon. The charm of high yields can be too bright, obscuring the inherent risks associated with such returns. Therefore, while these REITs carry impactful performances, they underline the importance of diligent evaluation before investment.