hi I'm Jimmy in this video I'm gonna walk through my top five dividend stocks
from the publicly traded real estate sector this video is part of our passive
income from dividends series where our goal is to find dividend stocks from
each of the eleven sectors that can give us the passive income that can help us
get closer to each of our own goal of financial independence there's a link to
all the other sector videos in the description below this is the final
video in that series okay so to make this top dividend stocks list well we
created a few basic rules they have to have a current dividend yield of more
than two percent they have to have a decent dividend coverage ratio which
means that they need to have the profits to cover their dividends and then
ideally we want them to be in a position to grow their dividends going forward
okay now for most of the industries that we've done so far to calculate the
dividend coverage ratio we take the profits of the company known as the
earnings per share and then we divide that by the dividends per share that
gives us the dividend coverage ratio but the real estate industry is a bit
different instead of earnings per share we're
going to use something called funds from operations or FFO for short to calculate
funds from operations we need to make a few adjustments to net income a lot like
it's very similar to the way you would adjust net income to come up with free
cash flow we're adjusting things like non-cash charges like depreciation or
amortization and then one times one time either gains or losses if they were to
sell a property or something on those lines
okay so let's jump in with our first real estate dividend stock first up we
have digital reality trust ticker symbol DLR
they have a dividend yield of about three and a half percent now what
digital reality does is they own technology related real estate things
like data centers or server farms things along those lines they own properties in
both the United States and over in England so this is what digital
realities dividend history looks like this goes back to 2011 and clearly
they've done a good job of growing dividends and it looks like analysts are
expecting for that dividend to Kin to continue to grow in the coming years
analyst estimates are the green bars and then when we add
funds from operations to this well we can see that funds from operations have
consistently covered their dividends which is likely a good sign for the
future of their dividend payments okay next up we have another real estate
investment trust called Extra Space Storage ticker symbol EXR
extra space has a dividend yield of a bit more than three percent right now
okay so as we might have guessed Extra Space Storage is one of the largest self
storage property managers in the United States now when we look at their
dividend well we can see if they've grown their dividend quite nicely since
2011 and then when we add funds from operations well we could see that
broadly speaking they've been covering their dividends
now their coverage ratio was a bit low back in 2015 but luckily for their
dividend they've improved that since that time okay so I'm a fan of what they
bring to the table next up we have crown castle international ticker symbol CCI
they have a dividend yield of about 3.3 percent now what I like about crown
castle is that they're one of the companies that owned many different
towers used for wireless services now this has really been a hot topic lately
with the emergence of 5g and that could play a key role in the future of crown
castle and ultimately their success as a dividend payer when we look at their
dividend history which really started on 2014 but mostly in 2015 well overall
they look decent when we add funds from operation to this well we could see that
typically crown castle pays out a large percentage of their funds from
operations as dividends which is frankly one of the advantages of companies
becoming a real estate investment trust they get tax advantages if they pay out
the majority of their profits in the form of dividends to shareholders which
explains why it looks like so many of these companies are just barely covering
their dividend payments in the form of funds for operations okay
so that explains why they have decent dividend payouts and also why their
coverage ratio is fairly low okay up next we have welt our ticker symbol WELL
right now wellTower has a dividend yield of about four percent and they
focus on the health care and senior housing sector given the age
population of baby wars in the u.s. well tower is likely to do well over the
coming years and then when we look at their dividends per share well we can
see that they have a decent dividend per share and then we add funds from
operations or once again funds from operations have broadly covered their
dividend with the one exception being back in 2017
but since then they're once again covering their dividends in 2018 and
analysts expecting for that dividend coverage to continue to improve over the
next couple years okay along the same lines we have another
REIT in a similar space called Ventus ticker symbol VTR Ventus has a dividend
yield of a bit more than five percent when we look at their dividend history
well it's been fairly steady outside of the pullback in 2016 and it seems that
expectations are that they will continue to grow their dividend for the next few
years but now when we add funds from operation to this well here it gets a
bit more interesting my hesitation with ventas is this sort of flat line that
they're showing in their funds from operation now they're still covering
their dividend which has a decent dividend you know that have been over
five percent right now and I believe that the long-term sustainability of
their business is promising they aren't a lot of medical buildings and hospitals
and properties focusing on the healthcare industry so I like it
because I like the company because of their solid dividend but I did hesitate
because of their growth so I figure we could do our own research and see this
might be one of those companies that is worth a deeper dive let me know in the
comments below if you think it's something I should do a deeper dive in
and we could see what we can uncover with this one now if we are interested
in the higher yield world of real estate investment trusts I actually did a REIT
primer video that could be a good next video to watch I've got a link right
here and a link in the description below and I want to thank you so much for
sticking with me all the way into the video I really appreciate it and I'll
see in the next video