3 REITs With Big Dividend Growth and Sustainable Payouts

Key Points

• REITs offer many potential advantages, including often-large dividend payments and exposure to real estate assets.
• These three REITs raised their annual dividend payments by as much as 150% in 2024 compared to 2023.
• The three also maintain sustainable payout ratios below 40%, based on their Adjusted Funds from Operations (AFFO).

When it comes to earning investment income, one of the most relevant investment vehicles is Real Estate Investment Trusts (REITs). REITs must distribute at least 90% of their taxable earnings out as dividends. This can lead to incredibly high dividend yields, sometimes reaching into the double digits.

Ultimately, REITs can provide big-time dividend income, especially if bought at the right price. They also provide exposure to the real estate market without needing to invest in and maintain physical property. Below, I’ll detail three REITs that massively increased their dividend payments in 2024. All current indicated dividend yield figures use Jan. 13 closing prices.

Summit Hotel: Hotel REIT’s Dividend Recovering Strongly Post-Pandemic

Compared to 2023, Summit Hotel Properties NYSE: INN increased its total dividend payouts in 2024 by 36%. The company paid $0.30 per share in dividends in 2024, up from the $0.22 in payments in 2023. The company’s dividend payments are recovering since they plummeted to zero in 2021.

The extreme hit hotel and travel companies took amidst the pandemic is well known, necessitating the suspension of the company’s dividend. Prior to 2020, the firm had raised or kept stable its annual dividend payments every year since 2011. This indicates a willingness to continually pay investors back more and more, barring some type of black swan event.

Based on its last quarterly dividend payment of $0.08, the company’s indicated dividend yield now sits at 4.7%. That is a marked increase from the 3.5% yield it started the year with. The company’s dividend also appears sustainable. The company’s trailing 12-month payout ratio is only 31%, based on its adjusted funds from operations (AFFO). AFFO is often considered a superior indicator to net income when it comes to evaluating REITs. It excludes non-cash items like depreciation, which can greatly affect valuable real estate assets. Using AFFO also enables a REIT to have a payout ratio that significantly differs from the 90% distribution threshold, as it calculates differently than taxable income.

Veris: Upscale Apartment REIT Increases Dividend by 2.5x

Next is Veris Residential NYSE: VRE, which increased its annual dividend payments by a stellar 150% over 2023. The company paid out over $0.26 per share on the year versus under $0.11 per share in 2023. In each 2024 quarter, the company raised its quarterly dividend payment, the latest of which was $0.08 per share.

Assuming that figure is stable through 2025, the company’s indicated dividend yield is just over 2%. At the beginning of the year, its indicated yield sat at 1.3%. The company’s payout ratio is also sustainable at below 40%.

Veris primarily owns, operates, acquires, and develops Class A multifamily properties. Its properties cater to sustainability-conscious residents, with 83% of its properties being Certified Green. The company’s properties are primarily located in the Northeast United States. It considers the Tri-State area, Jersey City Waterfront, and Boston Metropolitan area its key markets. Its affluent customer base has positioned it well over the past few years. Its revenue per home has increased 70% since the beginning of 2021. However, the rising wages of its residents mean that their rent makes up a lower percentage of their income now than in 2021, despite massive rent increases. This implies the company can sustainably continue to raise rents.

RLJ: Yield Hits Nearly 6% After 2024 Increases

Last is RLJ Lodging Trust NYSE: RLJ. The company’s $0.50 per share worth of payments in 2024 represents a 39% increase over 2023. The company’s stock price has also declined measurably over that time. This means its indicated dividend yield now sits at nearly 5.9%.

At the beginning of the year, the figure was just 3.4%. The company has been raising its dividend consistently over the past few years. The hotel REIT was also forced to drop its payout massively in 2020. In 2019, it paid out $1.32 in dividends per share before dropping it to just $0.04 per share the next year.

As with the other two REITs, the company has a sustainable payout ratio of around 35%. The company operates premium-branded hotels, with over 90% of its properties using the Marriott, Hilton, or Hyatt brands.

The company believes that its urban-centric real estate portfolio will be accretive over time, as it expects growth in this market to exceed the overall industry.