The long-term capital appreciation of stocks is one of the best ways to save for retirement. Over the decades, if you can earn annual returns of 8% or more, that may be enough to get you into retirement. In the short term, however, market volatility can cause even the most long-term oriented investors to lose sleep.

One way to keep faith during downturns is to add conservative, dividend-paying stocks to your portfolio. They may have the same declines as other stocks, but if you pick the right ones, they will continue to produce dividends to help set a floor to your short-term pain. The three real estate investment trusts (REITs) we will discuss, iron mountain (MRI 1.54%), Blackstone Mortgage Trust (BXMT 0.36%)and Macerich Co. (MAC 4.35%)all have strong dividend yields above 5% and could be the new backbone of your portfolio.

iron mountain

Iron Mountain is a combination REIT. For years, he specialized in storing high-priced specialty products like art and other documents that needed to be kept safe. This analog business continues to grow and has generated approximately $1.5 billion in revenue through June 2022, 5% more than in the same period of 2021. But the exciting part is the centers business. of data.

The REIT has adapted its expertise in storing sensitive files and business information to digital data centers. This side of the business generated $1 billion in revenue in the first half of 2022, up from just $775 million in 2021. That’s 33% growth. Soon, the new digital business will overtake the nearly 70-year-old analog business.

In total, Iron Mountain had $1.83 per share in adjusted funds from operations (AFFO), which is a REIT-specific cash flow measure. Management estimates that the AFFO for the year 2022 per share will be between $3.70 and $3.80. That puts the multiple at around 14, based on the stock’s recent price of around $54. By comparing, Digital real estatea data center competitor, trades around 19 times its AFFO.

Even better, the dividend yield is 4.7%. That means you get analog storage business certainty, data center business growth prospects, and nearly 5% cash back every year.

Blackstone Mortgage Trust

Blackstone Mortgage Trust is a mortgage REIT. Unlike other REITs, mortgage REITs do not own real estate and rent it out. Typically, they borrow money with short-term debt and use it to buy mortgages or mortgage-backed securities (MBS) that have longer tenors. Because of the difference in terms and the difference in credit rating, mortgages earn higher yields than short-term debt costs, and the REIT makes money on the spread.

In good times, mortgage REITs are able to borrow money non-stop at low rates, buy mortgages with enough diversification to not worry about default risk, and then pay huge dividends. to shareholders. It is not uncommon for a mortgage REIT to have a dividend yield in excess of 10%. Blackstone Mortgage is on the low end, and it’s around 8.2%.

The problem is when interest rates rise. Mortgage REITs can get stuck having to roll over debt at ever-higher rates, and eventually new short-term debt costs more than mortgages bought years ago are paying.

Part of the reason Blackstone Mortgage has a lower dividend yield than its peers is the type of mortgages it buys. Blackstone Mortgage buys floating rate corporate debt. This means that when interest rates rise, his income also rises. You can sit back and collect over 8% a year without worrying (as much) about interest rate risk.


Macerich owns and operates regional shopping centers. It’s not the type of business I would normally be excited about – shopping malls don’t exactly evoke visions of growth and modernity – but it has a dividend yield of 5.8% and is trading for only 75% of its book value, so why not look into it?

Macerich specializes in Class A shopping centers, what it calls “downtowns” which are located in major urban and suburban areas. REIT doesn’t really own the malls where you would go to a department store and buy your dad a tie for Father’s Day – it owns huge outdoor malls that also have gyms, hotels, restaurants expensive and other conveniences around.

The strategy is working well so far. The REIT added 900,000 square feet of new stores in 2021, and 2 million square feet of new stores have signed leases to open over the next three years. Debt is down $1.7 billion from 2020. And the REIT is strategically divesting from small town Class B malls to focus on big city Class A malls; it raised $470 million in 2021 selling Class B malls, has raised $2.2 billion since 2013 and is expecting over $100 million more.

Macerich’s valuation multiples are low and the dividend yield is high because investors see strip malls (as I did initially) and think “dead business”. But if he’s able to continue generating cash flow with his new strategy, that will make investors who dig a little deeper happy.