Generate passive income with these real estate stocks

Summary

• Dividend stocks offer investors periodic returns in a market where prices are generally vulnerable.
• Ares Commercial Real Estate, a lender in the commercial real estate segment, has a dividend yield of 12.46% based on Friday’s closing price.
• The Necessity Retail REIT, Inc. generated a total revenue of US$106.7 million in Q2 2023 and has a dividend yield of 12.07% based on Friday’s closing price.

Dividend stocks offer investors periodic returns, which are otherwise extremely rarely generated in the stock market. The market is highly vulnerable, which makes investors exposed to risk. However, dividend stocks are good for diversifying one’s portfolio and adding an additional layer of security to it.

Generally, dividend stocks are associated with minimal risk as compared to other market instruments. Their prices also remain stable in the market, as these stocks are issued by companies that are well-established.

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With that, let us examine two dividend stocks from the real estate sector that can be examined during this earnings season:

Ares Commercial Real Estate Corp. (NYSE: ACRE)

ACRE is an REIT firm that provides financing for commercial real estate and other similar investments. The company’s revenue is generated from the interest income that it generates through loans.

For Q2 2023, ACRE reported total revenue of 24.99 million, as against US$25.14 million in Q2 2022. Alternatively, it reported a net loss of US$2.19 million and basic EPS of negative US$0.04.

At the same time, ACRE declared a cash dividend of US$0.33 per common stock for Q3 2023. The Q3 dividend will be paid on October 17, 2023, to record shareholders as on September 29, 2023. 

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Based on Friday’s closing price of US$10.59, ACRE has a dividend yield of 12.46%. ACRE saw a monthly gain of 4.44% and a YTD gain of 1.15% as on August 7, 2023.

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The Necessity Retail REIT (NASDAQ: RTL)

RTL tracks the total return performance of the Benchmark Retail Real Estate SCTR Index before fees and expenses. At least 80% of its total assets are invested in the component securities of the index, under normal circumstances.

The company announced its results for Q2 2023 on August 3, 2023, showcasing a revenue of US$106.7 million, as compared to US$116.9 million in Q2 2022. Meanwhile, it reported a net loss to common stockholders of US$53.5 million or US$0.40 per common share.

The company distributed US$28.5 million in dividends to common stockholders, which represented a dividend payment of US$0.21 per share.

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Based on Friday’s closing price of US$7.04, RTL has a dividend yield of 12.07%. RTL stock rose 1% monthly and 16.75% on a YTD basis as on August 7, 2023.