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Two REITs With Generous Dividends

Tickers in this article: FDO FDX O VTS WGO

NEW YORK (TheStreet) -- Two real estate investment trusts with robust dividend yields that you may want to consider are Ventas and Realty Income


Last month, Chicago-based Ventas, which has a portfolio of more than 1,500 health care properties in 47 states, announced that it would increase its fourth-quarter dividend 8% to 72.5 cents a share. Over the past three years, Ventas has increased its dividend by an average of 8.5% per year, pushing its dividend yield to 4.8%. The stock trades at 14.6 times the company's estimated funds from operations for 2013. FFO is a common measure of profitability for REITs.

Ventas has a solid balance sheet with only 30% secured assets, and in December, S&P upgraded its rating on Ventas' senior unsecured debt to BBB+ from BBB.

Meanwhile, Realty Income, which is based in Escondido, Calif., has increased its dividend 19 years in a row and now has a dividend yield of 5.7%. The company has a portfolio of more than 3,500 properties in 49 states, and its tenants include FedEx , Family Dollar and Walgreen . No one tenant makes up more than 5.1 percent of the REIT's revenue. The stock is trading at around 20 times the company's FFO for 2012.

Last year, S&P bumped Realty Income's credit score from BBB to BBB+. The company has modest leverage with only 17% secured debt and well-laddered debt maturities that correlate loan maturities with lease maturities. That means as rates increase, the debt is fixed for a longer period, which mitigates risks for investors.

At the time of publication, the author was long Ventas and Realty Income.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.