As real estate investment trusts (REITs) are required to distribute 90% of their taxable income to shareholders through dividend payments, and the rise in interest rates should prove to be a positive catalyst.
Since mortgage rates have increased to 6%, REITs will have an upper hand in reeling in more interest income. Unfortunately, the downside comes with high inflationary pressures, which can impact costs, forcing REITs to charge more in rents.
These 2 real estate investment trusts are yielding over 10%, providing passive income as macroeconomic headwinds continue.
Orchard Island Capital Inc ORC is offering a dividend yield of 15.79% or $1.92 per share annually, making monthly payments, with an inconsistent track record of increasing its dividends. Orchard Island Capital invests in residential mortgage-backed securities (RMBS) across the United States, and the principal and interest payments of its (RMBS) are guaranteed by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association, and are backed by single-family residential mortgage loans.
From the inception of the stock repurchase program in 2015 through June 30, 2022, Orchard Island repurchased a total of 6,561,810 shares at an aggregate cost of approximately $42.6 million, including commissions and fees, for a weighted average price of $6.49 per share.
Go To: Prospective Home Sellers and Buyers Retreated in August as Mortgage Rates Approached 6%
Chicago Atlantic Real Estate Finance Inc REFI is offering a dividend yield of 13.43% or $1.88 per share annually, using quarterly payments, with an inconsistent track record of increasing its dividends. Chicago Atlantic Real Estate is a commercial real estate finance company, and its primary investment objective is to provide attractive risk-adjusted returns for stockholders over time, primarily through consistent current income dividends and capital appreciation.
As of June 30, 2022, the company had total loan commitments of approximately $357.1 million ($331.9 million funded, $25.2 million unfunded) across 22 portfolio companies.
John Mazarakis, executive chairman of Chicago Atlantic, noted, “The cannabis market fundamentals across the country continue to demonstrate that our strategy of lending to borrowers in limited-license states primarily with vertically integrated operations has created a strong investment platform and a very valuable loan portfolio.”
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