Income investors looking for higher-yielding stocks have often avoided the industrial sub-sector of real estate investment trusts (REITs). While some of the industrial REITs, such as Prologis Inc. (NYSE:PLD), Rexford Industrial Realty Inc. (NYSE:REXR) and Terreno Realty Corp. (NYSE:TRNO) have delivered strong growth to investors over the long term, the dividends of such issues have frequently yielded less than 3%.
For those seeking more income without sacrificing principal, some industrial REITs with above-average dividend yields have performed well over the last three months. Take a look at four of them.
Newlake Capital Partners Inc. (OTCMARKETS: NLCP) is a New Canaan, Connecticut industrial REIT with 32 properties of 1.7 million square feet across 12 states. Newlake Capital Partners specializes in triple-net leases to cannabis companies, as well as providing capital to them when necessary.
Newlake was founded in 2019 and had its IPO in August 2021. Its tenants include the largest companies in the cannabis industry, such as Curaleaf, Cresco Labs and Trulieve. As of Sept. 30, 2023, it had a 100% occupancy rate, with an average of 14.2 years remaining on its lease terms and 2.6% annual rent escalations.
Unlike most REITs, Newlake has very little debt. It has $31 million in cash and only $2 million in debt. It has been able to raise its quarterly dividend from $0.12 to $0.40 per share over the past five years. The dividend was last raised in December from $0.39 per share. The forward annual dividend of $1.60 per share yields 9.60%.
There is no new analyst coverage on Newlake. In December, Zuanic & Associates analyst Pablo Zuanic initiated coverage on Newlake with an Overweight rating. And since Nov. 1, Newlake has had a total return of 35.48% to lead all industrial REITs.
Innovative Industrial Properties Inc (NYSE:IIPR) is a San Diego, California-based internally managed, diversified/industrial REIT that specializes in triple-net leases and lease-backs on commercial properties with cannabis companies as its sole tenants. It also creates loans for cannabis operators who require funding. It was founded in 2016 and had its IPO on Dec. 1, 2016.
As of Q3 2023, Innovative Industrial Properties owned a total of 108 properties with 8.1 million square feet across 19 states. Its average lease length for its 29 tenants is 14.9 years. 91% of its properties are industrial, 3% are retail and 6% are industrial/retail. As of November 2023, it had a 97% lease collection rate.
Innovative Industrial pays a quarterly dividend of $1.82. The annual dividend of $7.28 per share yields 7.71%.
Since November 1, Innovative Industrial's total return has been 33.89%.
However, some income investors may find these REITs to be too volatile with portfolios consisting solely of cannabis-related tenants. If that's the case, consider the next two REITs.
LXP Industrial Trust (NYSE:LXP) is a New York-based REIT with 110 industrial properties, consisting of 53.9 million square feet. LXP had its IPO in 1993 and focuses on single-tenant warehouse/distribution properties in the Sunbelt and Midwest markets where population growth is strong. Most of its properties are less than 10 years old, with multi-purpose functionality.
Its most recent lease rate was a strong 99.2%, with Weighted Average Lease Terms (WALT) of 6.0 years and 2.6% rental escalations. Its largest tenants include Amazon, Nissan, Kellogg and Walmart. In 2023, LXP extended its $300 million in loan debt with 2025 maturity dates out to 2027.
LXP pays a quarterly dividend of $0.13 per share. The $0.52 annual dividend yields 5.67%.
Since Nov. 1, 2023, LXP has had a total return of 17.57%.
Plymouth Industrial REIT Inc. (NYSE:PLYM) is a Boston, Massachusetts-based industrial REIT that owns and operates 156 properties with over 34 million square feet in 13 East Coast and Midwestern markets. Its total portfolio occupancy as of Dec. 31, 2023, was 98.6%. During the fourth quarter of 2023, it leased an aggregate of 966,167 square feet, with a 23.4% increase in rental rates on a cash basis from these leases.
In 2023, with a 29.98% return, Plymouth outperformed larger and more well-known Industrial REITs such as Prologis and Rexford Industrial Realty. Still, this smaller REIT receives far less publicity than its rivals.
On Jan. 22, 2023, JMP Securities analyst Mitch Germain upgraded Plymouth Industrial REIT from Market Perform to Market Outperform and announced a $27 price target.
Plymouth Industrial pays a quarterly dividend of $0.225 per share. The $0.90 per share annual dividend presently yields 4.06%.
Plymouth has had a total return since Nov. 1, 2023, of 12.36%.
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