Another name that hiked its dividend payout substantially last week is DDR (DDR - Get Report), a $3.7 billion shopping center REIT that owns 546 shopping centers spread throughout the U.S., Puerto Rico, and Brazil. DDR increased its dividend by 50% last Thursday, bringing its quarterly payout to 12 cents per share. That gives DDR a solid 3.58% yield right now.
Don't be fooled by the apparent real estate exposure of a REIT. It's better to think of a REIT like DDR more as an income-generation instrument than a way to get exposure to commercial real estate.There are a couple of good reasons for that. Frst is the fact that most commercial REITs sign long-term triple-net leases with tenants. That keeps them off the hook for things such as property taxes, maintenance and insurance, leaving them to collect consistent rent payments instead. Another critical factor is the REIT status itself. Because REITs such as DDR are obligated by law to pay out the vast majority of their incomes to shareholders (before taxes), they're truly designed to throw cash over to your portfolio. DDR's diverse property portfolio makes the firm a fairly limited risk holding, even if that comes at the expense of a higher yield.