Dividend stocks are very lucrative buys when the market is down because dividend yields increase when stock prices fall. Now that the stock market is edging closer to recovery — up 10% over the past month — several dividend-cut stocks are rebounding.

Some experts think a bear market might still be on the horizon, but eventually a bull market is coming. That’s why investors looking for ultra-high dividend yields should consider buying Blackstone Mortgage Trust (BXMT -1.63%), Simon Real Estate Group (GPS -3.85%)and Gamma CAF (AFCG -4.66%) before the next bull market.

BXMT Dividend Yield given by Y-Charts.

The mortgage arm of the world’s largest investment company

Blackstone Mortgage Trust is a mortgage real estate investment trust (mREIT). The company, which is part of black stoneone of the world’s largest investment firms, originates and invests in senior commercial mortgages.

Lending can be tricky business, especially in environments characterized by high inflation and rising interest rates. mREITs like Blackstone are inherently highly leveraged. MREITs issue debt at short-term rates and then use that debt to create mortgages and long-term loans. Since longer-term debt yields higher rates than short-term debt, the company is able to generate profits from the difference between these two rates. So when interest rates rise, it increases an mREIT’s cost of borrowing, which in turn affects its earnings.

Fortunately, Blackstone Mortgage Trust primarily benefits from adjustable rate loans on its underlying commercial properties. So, instead of hurting his income, these loans adjusted rates up and therefore helped boost yields. Each 100 basis point increase generates approximately $0.15 of earnings per share annually.

Its portfolio also has a low loan-to-value (LTV) ratio of 67%, which means that if the market turns or borrowers stop paying due to a recession, the company still has a significant amount of funds available. own to rely on.

It is actively growing its portfolio despite market challenges, spending $2.8 billion in the second quarter of 2022. It also has a fantastic track record for continued growth. As of the second quarter of 2022, it had $1.5 billion in cash and only $200 million in debt maturities through 2026. Its dividend yield is currently 8.7%.

The Returning Child

Malls weren’t in good shape to begin with before the COVID-19 pandemic, but a year of closures and two years of declining demand completely destroyed the industry. It was terrible for Simon Property Group, the world’s largest owner and operator of high-end shopping centers and outlets. Its battered share price recovered from the March 2020 crash at the end of 2021, only to regain its losses as concerns loomed over the effects of the recession on retail spending.

Based on the company’s latest results, the concern may be unwarranted. Quarter-over-quarter, its occupancy levels are improving, with 93.9% of its portfolio occupied in Q2 2022. Its base minimum rent per square foot just exceeded 2019 levels. comparable operating funds (FFO) and net operating income (NOI), two important measures of a REIT’s profitability, rose 6.3% and 6.7% respectively.

The REIT was so confident about its latest performance that it raised its full-year guidance and increased its dividend nearly 3% from last quarter. Today, its yield is around 7%.

There are certainly challenges for the mall industry to overcome in the future, but Simon is definitely in a strong position to overcome obstacles and pivot as needed to continue to grow. It has two new developments underway, in Paris and Tokyo, and is actively redeveloping existing properties to include more mixed-use facilities.

One of the highest dividends

AFC Gamma is not your typical mREIT. It does not create or invest in real estate mortgages; instead, it lends money to the fast-growing but cash-strapped cannabis industry. Since cannabis is still federally illegal, cannabis growers don’t have access to traditional loans that could help them buy real estate, improve their business, or expand. This is where AFC Gamma comes in.

This young but fast-growing company is clearly filling a void in the marijuana industry, having completed $483.2 million in loan commitments through August 1. , an incredible number for an mREIT. Its fantastic earnings have prompted it to increase its dividend by 47% since last year, so the dividend yield is now around 10%.

Like other high-growth stocks, this REIT is not without risk. Legalizing marijuana at the federal level would open the doors to alternative funding and lead to less demand for its products. It also runs the risk of future failures, as not all companies in the cannabis industry will make it. But at the moment, AFC Gamma looks like an incredibly undervalued buy that offers growth opportunities and very high-yielding dividends.

Liz Brumer Smith has no position in the stocks mentioned. The Motley Fool fills positions and recommends Blackstone. The Motley Fool recommends Simon Property Group. The Motley Fool has a disclosure policy.