Investing in REITs is one of the best ways to up your dividend game. Although there are not many listed REITs available to invest in India, the handful of them which are there do not seem to be a bad deal, considering their lucrative dividend yields.
For the uninitiated, REIT (Real estate investment trust) is an entity that owns and operates income-producing real estate assets, primarily capitalizing on the rental income by leasing out their commercial/residential properties. This rental income is then distributed among unitholders of that REIT in the form of dividends. These REITs are generally known for their consistent dividend payouts and are one of the best proxies for investors looking to increase their exposure to the real-estate sector.
Capital appreciation is not the primary motive to invest in these REITs as they are not much into active buying and selling of properties. All they look for is a steady and stable rental income and that is what gets channelized to dividend income for investors. In that vein, if you are looking to diversify your dividend portfolio, here are 3 REITs you can have a look at.
Mindspace Business Parks REIT
Mindspace Business Parks (NS:MINS) is a REIT by K Raheja Group, having a market capitalization of INR 20,155 crores. The trust is primarily into developing and managing commercial office spaces and as of September 2022, it had a portfolio of 5 integrated business parks and 5 independent office spaces, with over 185 tenants.
It operates a total leasable area of 31.9 msf across Chennai, Pune, Mumbai & Hyderabad and as of March 2022, FIIs held a stake of 22.37% in the REIT. Its current dividend yield is 5.43%, with a payout ratio of 0.93 and 2.58 in FY21 and FY22, respectively.
Brookfield India Real Estate Trust REIT
Brookfield India Real Estate Trust (NS:BROF) has a market capitalization of INR 9,717 crores and is India’s only institutionally managed public commercial real estate vehicle. The company has A-grade commercial assets (five large campus-style office parks) located in key gateway cities in - Noida, Gurugram, Kolkata, and Mumbai.
The trust marked its debut on the Indian bourses in February 2021 and since then, has already given a dividend of INR 32.3 per share, and the CMP is INR 291. The current dividend yield of the trust stands at 7.62%.
Embassy Office Parks REIT
The last one on the list is Embassy Office Parks REIT (NS:EMBA). It was the first REIT to be listed on the Indian bourses and has a market capitalization of INR 32,216 crores. It owns and operates a 42.8 million square feet (msf) portfolio of eight office parks and four city-center office buildings in India.
Its tenants are some of the leading companies of the world such as Flipkart, JP Morgan, Wells Fargo (NYSE:WFC), WeWork, etc., helping it with a more stable and reliable source of rental income. It is interesting that for the last three financial years, the company has maintained a dividend payout ratio of 2.47 (average) and the current dividend yield is a good 6.4%.