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When it comes to generating investment income, one of the most suitable investment vehicles is real estate investment trusts (REITs). REITs must distribute at least 90% of their taxable income as dividends. This can lead to incredibly high dividend yields, sometimes reaching double digits.

Ultimately, REITs can provide large dividend income, especially if purchased at the right price. They also provide access to the real estate market without the need to invest and maintain a physical property. Below, I’ll detail three REITs that significantly increased their dividend payouts in 2024. All current dividend yields are based on closing prices on January 13th.

Summit Hotel: Hotel REIT Dividend Recovers Fast After Pandemic

Compared to 2023 Summit Hotel Properties New York Stock Exchange: Taxpayer Identification Number increased the total volume of dividend payments in 2024 by 36%. The company paid a dividend of $0.30 per share in 2024, compared to $0.22 in dividends in 2023. The company’s dividend payout is being restored after falling to zero in 2021.

The extreme blow dealt to hotel and travel companies during the pandemic is well documented, necessitating the suspension of the company’s dividend. Prior to 2020, the company had increased or maintained stable annual dividend payments every year since 2011. This indicates a willingness to continually return more and more to investors, barring any black swan event.

Based on the most recent quarterly dividend payment of $0.08, the company’s reported dividend yield is now 4.7%. That’s 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 just 31% based on adjusted funds from operations (AFFO). When it comes to REIT valuation, AFFO is often considered a better metric compared to net income. It excludes non-cash items such as depreciation, which can greatly impact valuable real estate assets. Using AFFO also allows the REIT to have a distribution ratio that differs significantly from the 90% distribution threshold because it is calculated differently than taxable income.

Veris: Upscale Apartment REIT Increases Dividend by 2.5x

Next is the Veris residential complex. New York Stock Exchange: VREwhich increased annual dividend payouts by a stellar 150% compared to 2023. The company paid out more than $0.26 per share this year, compared to less than $0.11 per share in 2023. which was $0.08 per share.

Assuming this figure remains stable through 2025, the company’s reported dividend yield would be just over 2%. At the beginning of the year, its stated yield was 1.3%. The company’s payout ratio is also healthy and remains below 40%.

Veris primarily owns, manages, acquires and develops Class A multifamily properties. Its properties are targeted at sustainability-conscious residents, with 83% of its properties certified as green. The company’s properties are primarily located in the northeastern United States. The company considers its key markets to be the tri-state area, the Jersey City waterfront and the Boston metropolitan area. Its rich customer base has positioned it well over the past few years. Household income has increased by 70% since the start of 2021. However, residents’ rising wages mean rent makes up a smaller percentage of their income now than in 2021, despite massive rent increases. This means the company can sustainably continue to raise rents.

RLJ: Yield to rise nearly 6% after hike in 2024

The latest is RLJ Lodging Trust. New York Stock Exchange: RLJ. The company’s payout of $0.50 per share in 2024 represents a 39% increase over 2023. The company’s share price also dropped significantly during this time. This means the listed dividend yield is now almost 5.9%.

At the beginning of the year, this figure was only 3.4%. The company has consistently raised its dividend over the past few years. The hotel REIT was also forced to sharply cut its payouts in 2020. It paid out a dividend of $1.32 per share in 2019, before cutting it to just $0.04 per share the following year.

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

The company believes its urban real estate portfolio will increase over time as it expects growth in this market to outpace that of the industry as a whole.

Before you consider Summit Hotel Properties, you need to hear this.

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