Real estate investment trusts, or REITs, are publicly traded companies that invest in real estate.
By law, REITs must pay out at least 90% of their taxable income to shareholders, which means many of the best REITs have extremely high dividend yields.
Analysts say the 3 stocks below are among the best REITs to buy. With so many choices, it can be easy to overlook some great options.
Here are our three top REITs ideal for those seeking to generate passive income.
First Pick: Armour Residential REIT Inc. (NYSE: ARR)
Armour Residential REIT Inc. (NYSE: ARR) invests in residential mortgage-backed securities that are issued or guaranteed by Fannie Mae or Freddie Mac or are guaranteed by Ginnie Mae.
Armour Residential REIT has a forward dividend of $1.20, yielding an eye-popping 25.21%. That said, it closed at $4.96 on Oct. 25, near the low end of its 52-week range of $4.38 to $10.91.
Second Pick: Chimera Investment Corp. (NYSE: CIM)
Chimera Investment Corp. (NYSE: CIM) invests in residential mortgage loans, residential mortgage-backed securities and commercial mortgage-backed securities. The company has $14 billion in assets.
Closing at just $6.42 per share on Oct. 25, Chimera Investment Corp. stock has a 52-week range of $4.91 to $16.85. Its forward dividend is $0.92, yielding 15.59%.
Third Pick: PennyMac Mortgage Investment Trust (NYSE: PMT)
PennyMac Mortgage Investment Trust (NYSE: PMT) invests in residential mortgages, mortgage servicing rights, mortgage-backed securities, and hedge investments that relate to these. The company works with prime credit quality loans that are newly originated.
PennyMac has a forward dividend of $1.88, with a yield of 16.29%. The stock closed at $12.65 on Oct. 25 and has traded between $10.78 and $20.49 over the past 52 weeks.
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