REIT Rebound: 3 Top REITs Averaging 9.8% FWD Yield
Steven Cress, Quant Team
SA Quant Strategist
Summary
- REITs are staging a comeback in 2026, with the real estate sector (XLRE) outperforming broad equities, potentially signaling stronger full‑year returns.
- Given recent market volatility, REITs can be a smart addition to portfolios, offering steady income today alongside meaningful long‑term capital appreciation potential.
- SA Quant’s proprietary REIT factor model has identified three REIT Strong Buys delivering an average forward yield of nearly 9.8%, pairing high income potential with solid dividend safety grades.
- I am Steven Cress, Head of Quantitative Strategies at Seeking Alpha. I manage the quant ratings and factor grades on stocks and ETFs in Seeking Alpha Premium. I also lead Quant Growth and Income, which is a model portfolio for dividend investors interested in capital appreciation and income.
Why 2026 Could Be the Year REITs Rebound
2026 is shaping up to be a brighter year for REITs than 2025. The real estate sector (XLRE) has outperformed broad equities so far this year, and that early strength has historically been a good indicator for full-year performance.
State Street Real Estate Select Sector SPDR ETF (XLRE) vs. The S&P 500 YTD
Last year, REITs lagged as higher-for-longer rates and valuation pressure weighed on returns, even though fundamentals remained solid. In 2025, the broad equity market outperformed REITs, but by mid 2026, REITs had reversed that gap and were ahead of the Russell 1000, with gains broadening across most property sectors. That strength reflects both supportive operating trends and the shifting landscape of the REIT sector tied to long-term shifts in the economy.
Macro tailwinds could also portend continued strength for the sector. Recent inflation data has cooled, which could lower expectations for additional Fed tightening and help stabilize rate expectations that are paramount for real estate valuations. June CPI declined 0.4% month over month, core CPI was flat and running at 2.6% year over year, and June PPI also came in softer than expected, reinforcing the idea that inflation pressures may be easing rather than reaccelerating.
With that macro pressure easing, the sector is getting more support from fundamentals too. Industrial REITs continue to benefit from reshoring-related demand, while retail, senior housing, hotels, and data centers have been cited as areas where demand is outpacing new supply, giving landlords more pricing power.
Outside of appreciation potential, REITs can be a useful portfolio tool in the current volatile market because their income stream can help steady overall cash flows. Their dividends may offer a more reliable return profile than many equities, especially as investors rotate between inflation concerns, rate-cut expectations, and growth-stock swings. In that role, REITs can provide both income and a measure of stability while markets digest a still-uncertain macro backdrop
How I Chose My Top 3 REITs Averaging 9.8% FWD Yield
When I write dividend-focused articles, I tend to focus on companies with excellent dividend safety and growth grades. However, for this exercise, I targeted REITs using Seeking Alpha’s Top Real Estate Stock Screener, filtering for Strong Buys with yields above 5% and dividend safety that’s better or broadly in line with the sector. I placed less emphasis on dividend growth because the goal here was to identify names that could offer a sizable income stream today, even if near-term payout growth is not especially compelling. Let’s take a closer look at the names below.
1. Innovative Industrial Properties, Inc. (IIPR)
- Industry: Industrial REITs
- Market Capitalization: $1.81B
- Quant Sector Ranking (as of 7/23/2026): 15 out of 168
- Quant Industry Ranking (as of 7/23/2026): 3 out of 13
- Quant Rating: Strong Buy
- FWD Yield: 12.20%
Innovative Industrial Properties (IIPR) is the No. 3 Quant-ranked Industrial REIT that owns and leases specialized facilities to state‑licensed cannabis operators, with a growing foothold in life‑science real estate. Its recent earnings call showed revenue and cash flow holding steady while growth is driven by signing new tenants on formerly defaulted properties, progressing dozens of lease agreements, and investing in the IQHQ life‑science project, all supported by solid liquidity and modest debt.
IIPR AFFO growth 5Y CAGR is 77% above the sector median, accompanied by stellar profitability. The company offers an AFFO margin that’s 94% above the REIT sector median, alongside a net income margin of nearly 46%. The company especially stands out in terms of its valuation where it offers both trailing and forward price/AFFO ratios that are 46% and 49% below the sector median, respectively.
IIPR Valuation Grade
The company is particularly attractive for its dividend profile. Currently yielding 12.20%, well above the sector average, IIPR also has solid dividend safety, supported by an FFO interest coverage ratio of 9x compared to the sector’s 3x. IIPR’s offers a potent combination of excellent fundamentals alongside stable income, making it hard to overlook for REIT investors.
2. EPR Properties (EPR)
- Industry: Other Specialized REITs
- Market Capitalization: $4.75B
- Quant Sector Ranking (as of 7/23/2026): 17 out of 167
- Quant Industry Ranking (as of 7/23/2026): 1 out of 11
- Quant Rating: Strong Buy
- FWD Yield: 6.00%
EPR Properties is a specialty REIT that owns experiential real estate, including movie theaters, education assets, and recreation venues such as ski resorts and water parks, largely under long-term net leases. The company was one of the inaugural holdings in the Quant Growth & Income portfolio and has stood out in this volatile market, returning about 10.3% since the portfolio’s launch on June 3. The company has invested $7.1 billion across 335 properties and maintains a 99% leased or operated rate.
Source Link: EPR Q1 2026 Investor Presentation
EPR’s growth profile has rapidly improved to an ‘B+’ after sitting at a ‘C’ just six months ago. Highlights include Its forward AFFO growth of 5.40% that exceeds the sector median by nearly 85%. The company also showcases a TTM dividend growth rate of 4% vs. just 2% for the broader REIT sector. ERP’s triple‑net lease structure has helped fortify its profitability by shifting property‑level costs (taxes, insurance, and utilities) to tenants. This protects margins even in a higher‑rate, higher‑inflation environment.
EPR Profitability Grade
EPR offers a forward dividend yield in the 6% range, which is comfortably above the broader REIT sector. This sizable dividend is supported by its forward AFFO yield is close to 9%, creating a cushion that supports the current payout while still leaving room for the company to reinvest in future growth.
3. NewLake Capital Partners, Inc. (NLCP)
- Industry: Industrial REITs
- Market Capitalization: $324.33M
- Quant Sector Ranking (as of 7/23/2026): 6 out of 167
- Quant Industry Ranking (as of 7/23/2026): 1 out of 13
- Quant Rating: Strong Buy
- FWD Yield: 11.10%
NewLake Capital Partners is another cannabis-adjacent REIT provides real estate capital to state‑licensed cannabis operators. The company operates a triple-net lease model that involves sale‑leaseback deals on cultivation facilities and dispensaries. The REIT buys properties and leases them back to operators, giving tenants growth capital while retaining long‑term ownership of the underlying real estate. NLCP is benefiting from a rapidly expanding U.S. cannabis footprint. Rising rising state adoption and a projected mid single‑digit industry CAGR create a long runway for NewLake.
Source Link: NLCP Investor Presentation
NLCP’s forward dividend yield sits around 11% and exceeds the sector median by more than 150%. Its dividend profile is further supported by strong coverage metrics, including an interest coverage ratio of roughly 30x, which underscores both payout safety and balance‑sheet strength.
NLCP Dividend Safety Grade
NewLake’s growth story is increasingly tied to a more accommodative regulatory environment, dovetailed by its conservative balance sheet. A potential federal rescheduling of medical cannabis, potential 280E tax relief, and a coming ban on intoxicating hemp products could strengthen tenant finances, creating more opportunities for NewLake to deploy capital into cultivation and dispensary properties. The stock trades at a hefty discount across key REIT valuation metrics like its FWD Price/AFFO, which sits 51% below the sector median. With the cannabis industry on the cusp of multiple growth catalysts, now could be an opportune time to consider adding this high‑yielding value name to a diversified income portfolio.
Concluding Summary
REITs are finally getting some tailwind in 2026, with the sector outperforming broad equities as inflation has been leveling and interest‑rate expectations stabilize. In this environment, income seekers can find attractive opportunities in select high‑yield names that combine strong payouts with solid fundamentals and balance‑sheet strength. SA Quant has identified Innovative Industrial Properties (IIPR), EPR Properties (EPR), and NewLake Capital Partners (NLCP) as three REITs offering a near average 9.8% forward yield alongside strong factor grades and robust dividend safety.
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