These Top 3 Dividend Growth REITs Offer High Yields to Income Investors

Real estate investment trusts, or REITs, are widely appealing for income investors due to their high-dividend yields.

There are many different industries within REITs. For example, there are REITs that own retail properties, and others that own healthcare properties.

Apartment REITs are attractive options because they may be more recession-resistant than other types of REITs, as people will always need places to live, even during an economic downturn.

This article will discuss three of our top-ranked apartment REITs for income investors right now.

1. American Assets Trust (AAT)

American Assets Trust AAT is a REIT that focuses on acquiring, improving and developing office, retail and residential properties throughout the U.S., primarily in Southern California, Northern California, Oregon, Washington and Hawaii.

Its office portfolio and its retail portfolio comprise of approximately 4.1 million and 3.1 million square feet, respectively. AAT also owns more than 2,100 multifamily units and has a market capitalization of $1.7 billion.

In early February, AAT reported financial results for the fourth quarter of fiscal 2024. Adjusted same-store net operating income grew 3% but funds from operations (FFO) per share dipped by 4% over the prior year’s quarter due to higher interest expense. AAT has beaten the analysts’ estimates for 16 consecutive quarters.

AAT expects FFO per share of $1.87 to $2.01 for 2025. AAT pursues growth by acquiring properties in submarkets with favorable supply and demand characteristics, including high barriers to entry. It also redevelops several of its newly-acquired properties in order to enhance their value.

In addition, it has a capital recycling strategy, which involves selling properties whose returns seem to have been maximized and buying high-return properties. Thanks to these growth drivers, AAT has grown its adjusted FFO per share at a 4.3% average annual rate over the last decade.

Many of AAT’s properties are located in in-fill locations, where developable land is scarce and zoning regulations significantly restrict new development. Its submarkets in Southern California, Northern California, Oregon, Washington and Hawaii are characterized by high barriers to entry, which offer the REIT a strong negotiating position with its tenants and enable it to implement material rent hikes every year.

AAT has increased its dividend for five consecutive years.

2. American Homes 4 Rent (AMH)

American Homes 4 Rent AMH is an internally-managed real estate investment trust which focuses on acquiring, developing, renovating, operating and leasing single-family homes as rental properties. The trust holds nearly 59,000 single-family properties in sub-markets of metropolitan statistical areas in more than 20 states.

On February 20, 2025, AMH announced fourth quarter and full year results. For the quarter, revenue grew 6.8% to $436.6 million, though this was $5.4 million less than expected. FFO of $0.45 compared favorably to FFO of $0.43 in the previous year and was in-line with estimates. For the year, revenue grew 6.5% to $1.73 billion while FFO of $1.77 per share compared to $1.66 per share in 2023.

In the fourth quarter, AMH had a same-home average occupied day percentage of 95.4%, which was an 80 basis-point decrease from the prior year. New leases signed had rental rate growth of 0.2% while renewal rental rates increased 4.9%, leading to a blended growth rate of 3.3%. Average monthly rents per property increased 5.3% while property expenses increased 4.8% to $113.6 million.

For 2025, AMH expects core FFO in a range of $1.80 to $1.86 for the year. At the midpoint, this would represent a 3.4% increase from last year.

AMH is one of the largest operators of single-family in the U.S., giving it a size and scale that is above most of its peer group. It has generated solid growth in its history. AMH’s funds-from-operation grew at a rate of 9.4% per year for the 2015 to 2024 period, though this has slowed somewhat to 8.8% annually over the last five years.

Still, its steady growth has allowed AMH to increase its dividend for five consecutive years, including a 15% dividend hike on February 12, 2025.

3. UDR, Inc. (UDR)

UDR, Inc. UDR, also known as United Dominion Realty Trust, is a luxury apartment REIT. The trust owns, operates, acquires, renovates and develops multifamily apartment communities in high barrier-to-entry markets in the U.S. that have limited land for new construction, complicated entitlement processes, low single-family home affordability, and strong employment growth potential.

The majority of UDR’s real estate property value is established in Washington D.C.; New York City; Orange County, California; and San Francisco. As of December 31, 2024, UDR owned or had an ownership interest in 60,120 apartment homes.

UDR reported fourth quarter 2024 results on February 5, 2025. The company’s adjusted FFO was flat year over year at $0.54 per share. The quarterly AFFO payout ratio of 79% is relatively safe for a REIT that must pay out the majority of its earnings to shareholders. Physical occupancy of the real estate portfolio was flat compared to the prior-year period at 96.8%.

The trust initiated its guidance for 2025 and now forecasts AFFO per share of $2.45 to $2.55, for a midpoint of $2.50. The company also anticipates 1.25% to 3.25% growth in same-store revenue, 2.75% to 4.25% growth in same-store expenses, and 0.5% to 3.0% growth of same-store net operating income over 2024.

UDR aims to grow AFFO by maximizing revenue by balancing blended lease rate growth against active occupancy management, and improving cost controls through its next-generation operating platform (NGOP).

Additionally, UDR targets generating 10% to 15% higher NOI growth than the market over the first three years of ownership following its acquisitions. Management is placing emphasis on the NGOP, expecting it to produce strong results in the years ahead. The NGOP is the self-service technology component unique to UDR and has already contributed to controllable margin expansion.

UDR has increased its dividend for 14 consecutive years. UDR’s average five-year payout ratio of 76% is well covered for a REIT.

At the time of publication, Ciura had no positions in any securities mentioned.