REITs & Regret: A Dividend Diary

by

Right. Dividend investing. It sounds so sensible, doesn’t it? A nice, steady income stream. Like a responsible adult. Unlike, say, my impulse purchase of alpaca socks last week. Anyway, the point is, you need to be careful. It’s not all passive income and early retirement dreams. It’s a minefield, frankly. Especially when everyone’s chasing yield. It’s like moths to a very financially precarious flame.

I’ve been looking at REITs – Real Estate Investment Trusts – because, well, everyone says they’re good for dividends. Which is…comforting. They’re supposed to pay out 90% of their taxable income, which sounds generous, almost suspiciously so. Like a boyfriend who buys you extravagant gifts to distract from the fact he’s terrible at doing the dishes. And there are so many types. Residential, shopping malls (remember those?), even gambling places. The problem is, a high yield isn’t automatically a ‘buy’ signal. It’s more like a flashing red warning light, really. Which, naturally, I ignored at first.

I got rather fixated on Medical Properties Trust (MPT 0.36%). Hospital properties! Seemed…solid. And the dividend yield was 5.7%. 5.7%! It felt…too good to be true. And, well, it was. Turns out, a falling share price can really inflate a yield. It’s like making a small glass of wine look like a magnum bottle. The stock has plummeted 74% in five years. Five years! I’m starting to think my alpaca socks were a better investment.

They did manage a small dividend increase recently – one cent per share. One cent! It’s like being given a penny after losing a fortune. And despite some revenue growth, they were still losing money. A loss of $276 million. It’s…discouraging. And the FFO – Funds From Operations, which is apparently the important metric for REITs – was down almost 29%. Plus, they’re carrying a debt load of $9.6 billion. It’s enough to give anyone palpitations.

Units of Cryptocurrency Lost: 12. Hours Spent Watching Charts: 9. Number of Panicked Texts to Friends: 24. I’m starting to think I should just stick to artisanal cheese.

A Tale of Two REITs

Then I stumbled upon Welltower Inc. (WELL 0.37%). Another medical REIT, but…different. They focus on medical office space and senior living facilities. Which, let’s face it, is a much more sensible long-term bet. People get older. They need healthcare. It’s not exactly rocket science. They own over 2,500 communities across the US, Canada, and the UK. And those countries are all facing rapidly aging populations. It’s…logical.

Loading widget...

Their revenue grew 35% last year to $10.8 billion. Impressive. Net income dipped slightly, but that’s probably just higher expenses. And their FFO per share increased by a whopping 22.5%. They even have a decent operating margin of 3.3% and a net margin of 9%. It’s…encouraging. Much more encouraging than the financial abyss that is Medical Properties Trust.

The dividend yield is only 1.44%. Much lower. But also…much safer. They did cut their dividend a few years ago, which was alarming. But they’ve started growing it again. A 10% increase last year. It’s…progress. Although, the payout ratio is a bit high – 189%. But they’ve managed even higher ratios in the past, so it’s not a complete disaster.

Number of Times I’ve Considered Selling Everything and Becoming a Beekeeper: 7. Number of Times I’ve Actually Looked Into Beekeeping: 0.

Considering the US 80+ population is set to double by 2045, Welltower seems…well, positioned. It’s not a guaranteed win, of course. Nothing is. But it feels…less likely to end in financial ruin. I’m tentatively adding it to my watchlist. Tentatively. Because, let’s be honest, I’m still traumatized by the alpaca socks.

I suggest you give Welltower a look, too. For a secure, long-term dividend play. And maybe, just maybe, avoid anything that sounds too good to be true. Especially if it involves a plummeting stock price and a desperate attempt to inflate a yield.

Read More

2026-03-09 10:52