They pay out a big portion of their cash flow in dividends.
REITs also retain some cash to grow their portfolios, which allows them to increase their dividends.
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Investing in real estate can be very lucrative, and rental properties can generate lots of income for their investors. Real estate investment trusts (REITs) own large and growing rental property portfolios, giving them the potential to be money-printing machines. Most REITs pay out the bulk of their income to investors through dividends, making them great ways to collect a lot of passive income from real estate.
Here are some REITs that generate billions of dollars in annual cash flow for their investors, allowing them to pay lucrative dividends.
Image source: Getty Images.
American Tower(NYSE: AMT) owns more than 149,000 cell towers around the world and a growing portfolio of U.S. data centers. The REIT leases capacity on this infrastructure to mobile carriers, technology companies, and other tenants under long-term leases.
Last year, American Tower booked $10.1 billion in total revenue, including $9.9 billion in property revenue. After expenses, the REIT produced $4.7 billion in adjusted funds from operations (FFO), a REIT metric that measures free cash flow available to pay dividends. American Tower has a roughly 3% current yield and paid out $3 billion in dividends while investing $1.6 billion into capital projects, including building additional cell towers and expanding its data center capacity.
Those growth investments helped boost its revenue by 1.1% last year and its adjusted FFO by 6%. American Tower's growing portfolio and income have enabled it to increase its dividend over the years.
Prologis(NYSE: PLD) owns 5,900 warehouses across four continents and 20 countries, leased to 6,500 customers. In addition to rental income, the industrial REIT makes money by providing essential services to its customers, such as solar power, warehouse automation, and EV charging. Prologis also earns fees by managing several strategic capital funds for private investors.
In 2024, the logistics real estate leader generated $8.2 billion in revenue, including $7.5 billion in rental and other revenue. Prologis produced $4.4 billion in adjusted FFO, nearly $3.7 billion of which it paid to shareholders in dividends. It has a nearly 4% current yield.
The REIT used the cash it retained to help fund growth investments. It made $1.9 billion in acquisitions, stabilized $4.2 billion of development projects, andstarted $1.3 billion of new developments, including some data centers. Prologis also had $4 billion of property sales or contributions to its managed funds. The company's growth investments enable it to pay a rising dividend. Prologis has increased its dividend at a 13% compound annual rate over the past five years, faster than the S&P 500‘s 5% and the REIT sector average of 6%.
Realty Income(NYSE: O) owns over 15,600 properties across the U.S. and Europe. The diversified REIT, which engages in retail, industrial, gaming, and other properties, leases its properties to many of the world's leading companies under long-term net leases.
Last year, Realty Income generated nearly $5.3 billion in revenue, primarily from collecting rental income. The REIT produced $3.6 billion in adjusted FFO. It has a roughly 5.5% current yield and paid out almost $2.7 billion of that cash to investors in dividends. Realty Income used the cash it retained to invest in additional income-generating real estate.
Realty Income's new investments grow its rental income, allowing the REIT to increase its monthly dividend. It has raised its payment 131 times since coming public in 1994.
Simon Property(NYSE: SPG) owns 232 shopping, dining, entertainment, and mixed-use destinations across North America, Asia, and Europe, primarily consisting of malls and outlet centers. It also owns interests in two other retail property companies.
In 2024, Simon generated almost $6 billion in revenue, including nearly $5.4 billion in lease income. The mall owner's current dividend yield exceeds 5%, and it produced a record $4.9 billion in FFO last year while returning more than $3 billion to investors.
Simon uses the cash it retains to invest in new developments and redevelop existing properties. Those projects increase its rental income, which should enable the REIT to continue raising its dividend. It increased its payout by 5% earlier this year.
These REITs have turned their real estate portfolios into money-printing machines. They generate significant cash flows, the bulk of which they pay out to investors through dividends. The REITs retain enough money to grow their portfolios, which allows them to steadily increase their dividends. That makes them great stocks to buy for those seeking to collect passive income from real estate.
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Matt DiLallo has positions in American Tower, Prologis, Realty Income, and Simon Property Group and has the following options: long January 2026 $170 calls on American Tower and short January 2026 $175 calls on American Tower. The Motley Fool has positions in and recommends American Tower, Prologis, Realty Income, and Simon Property Group. The Motley Fool recommends the following options: long January 2026 $180 calls on American Tower, long January 2026 $90 calls on Prologis, and short January 2026 $185 calls on American Tower. The Motley Fool has a disclosure policy.
These Real Estate Dividend Stocks Are Money-Printing Machines was originally published by The Motley Fool
