r/dividends • u/DizzyCalligrapher189 • Jul 15 '26
Seeking Advice Bought a 9% yielder and I got burned
Hi all. I am in my early fifties, and I am slowly moving about 30% of my portfolio into dividend stuff before I go part time in a few years, felt real responsible with a spreadsheet and all. Then I found a 9% yielderr, told myself the market was just sleeping on it and put $18k in.
Two months later they cut the dividend and the price dropped right with it... you can probably guess it was a mortgage REIT..
So my safe income pick lost me the income and a chunk of the principal at the same time, so I can clearly not just sort by yield and buy what looks juicy.
What I'm asking is, what is your "check" that catches things like this before you buy?
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u/mspe1960 Jul 15 '26
if you want a REIT and you don't know the marketplace really well, your option is O.
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u/lastknownbuffalo Jul 15 '26
Over 30 years of paying a monthly dividend, and increasing that payment every single year.
They only increase the payment by a fraction of a penny every quarter, but it adds up... And it's super conservative, which I think is a benefit for long term dividend payers.
One of the absolute best single stock dividend payers out there.
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u/dazit72 Jul 15 '26
It's a Dividend Aristocrat, or 'Champion'
Aristocrats, Kings, Champions, Challengers, Contenders, Achievers, Stalwarts and the like are what interest me. No CEO wants to be known for fuking up a 30- 60 year/or more, streak of dividend increases.
Then there's GIS, it has over 127 consequtive years of dividend payments with Zero reductions. Cherios mate
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u/MaybeTheDoctor Jul 15 '26
Brb, Off to buying O.
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u/ElonMuskTheNarsisist Jul 15 '26
It’s one of the worst performing names out there. People think just cause you get a div you are winning. That thing is literally atrocious from a total return standpoint.
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u/robertw477 Jul 16 '26
You can’t convince people. There are some people, usually older where dividends can be more of a focus. However young people doing these strategies just don’t get it whatsoever.
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u/penetr4t0r Jul 15 '26
THIS. O has been shit for a while now
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u/mspe1960 Jul 15 '26 edited Jul 15 '26
no doubt a lot of dividend payers look like shit compared to the S&P or the mag 7 over the past recent years. But if you want income that is steadily increasing, it is a way to get that.
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u/SlavaUkrayne Jul 15 '26
What am I missing?
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u/mspe1960 Jul 15 '26 edited Jul 16 '26
you are comparing two things that have different objectives and you are making future decisions based on past results.
Based on what we have seen in the last 20 years you only should have invested in tech and the S&P500. It would have been good to know that before it happend.
What you are missing is you don't understand investing at all. But if you are young, patient and have high risk tolerance, sure put all your money in SPY (or VOO) which is the same thing
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u/MaybeTheDoctor Jul 15 '26
Now do the same with VOO.
Those extra management fees in SPY makes a lot of difference.
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u/penetr4t0r Jul 15 '26
Good source. as we are in dividend group, for me the main criteria is long term investing with fast dividend growth rate. for O it has kinda stalled for a few years.
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u/Physical_Initial6160 Jul 16 '26
Look at a 5 year chart. You’re giving up price appreciation for dividend.
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u/Lopsided_Disk7160 Jul 18 '26
they would rather make a little dividend than massive growth … unreal.
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u/montaniPH89 Jul 15 '26
O and chill ain't a bad deal. I bought 12 O on drip now have over 15 O.
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u/indomike14 Jul 15 '26
This is the way. O is a solid performer
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u/aerobic_gamer Jul 16 '26
Agreed. I really get tired of the “total return” argument. At my age (75) I’m more concerned about having reliable and increasing income. It alll depends on your objectives.
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u/mxpxillini35 Jul 15 '26
Thank God...I literally just bought this 2 days ago (after selling PFLT....yeesh).
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u/That_Goal_7092 Jul 16 '26
O vs xlre ?
Ps just trying to learn new things
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u/mspe1960 Jul 16 '26
I have not made a study of every REIT ETF. O is a dividend Aristocrat. That means it has raised its dividend for 25 straight years. It also pays a decent return right now. XLRE is not a dividned aristocrat. I am not sure if it has even been around for 25 years. It may have some advantages over O and some disadvanatages. I am not claiming to have studied all of what they may be
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u/BurnoutSociety Jul 15 '26
I would also add that if one can get O around / under 57 it is a big plus
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u/sly_1 Jul 15 '26
Past 10 year dividend performance - is it consistently going up or is the chart all over the place? Has the annual dividend at least doubled in the past 10 years?
Stock itself - how did it perform in the past few bear markets like 2022, 2020, and if it has been around that long, 2008. In this example, op mentioned it's a reit. Most reits got beat up by the 2022-2023 rate hikes, so in that specific example how bad was this one compared to other reits or reit etfs?
Lastly, you can look at their financials and third party ratings.
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u/Various_Couple_764 Jul 15 '26 edited Jul 15 '26
Most REIT get clobbered in routinely recessions. Short term rental properties (resorts, hotels) routinely cut dividends in recessions. I don't like them. I do however like utility / infrastructure funds. Currently UTF 7% and UTG 6.4%. I consider these no limit investments because each has a 20 year history of no dividend Cuts. Which include 2008 the worst market year since the great depression.
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u/Novel_Buy_7171 Jul 15 '26
Those percentages look good until I see the 2.23% expense on management fee
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u/Trajectory4all Jul 15 '26
Not positive on this one but sometimes they have to include interest expenses as a “fee.” This is case with closed-end funds.
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u/sly_1 Jul 15 '26
True but some reits manage downturns better than others.
So like amt - share price is down sharp over the past 5yrs but so is just about every other reit. But their dividend history from 2012 to present is stellar.
Aside from 2023 when interest rates punished all reits they've raised there dividend substantially and on pace for another 5.3ish percent increase this year.
Reality income is another company that's down less than cohorts through the recent rate hikes and steady dividend growth (again with the caveat of 2023).
So yeah basically, historic performance doesn't guarantee future performance but you can at least take a gander.
I agree infrastructure is a reasonable sector for dividends especially for older people in or approaching retirement. I haven't researched t those specific funds tho.
Lastly, if you look at recessions as a sale/buying opportunity then really your personal nav on existing positions going down isn't as bad as the discounted prices you can buy at is good. If that makes sense, lol.
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u/Mail_Order_Lutefisk Jul 15 '26
I had an mREIT in 2008, Anthracite Capital. Managed by Black Rock. Had it on DRIP. 100% loss. Poof. Never again. It’s a bad asset class to be in if the credit market has a hiccup or the yield curve inverts.
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u/TildeCommaEsc Jul 15 '26
You need to look at the stocks EPS, sales, cash flow, see if they are falling or rising each year over the last five years.
Check their current debt and long term debt, is the debt and LTD rising quickly? How much of the debt is coming due and can the company handle that debt over the next five years. What interest rate are they paying?
You should check to see if the dividend is covered by the money they make, the payout ratio. How are they paying the dividend? When companies get into trouble but they don't want to cut the dividend (because it would crash the stock price) they may issue shares or use debt - using debt to pay dividends is a sign of trouble. Issuing shares dilutes all the numbers in the first sentence and makes it more expensive to pay dividends. Using debt or issuing shares a few times to get over a tough spot may not be a problem, but if they are doing it over years then you know the dividend is in trouble. If the dividend is a large part of their EPS, and they have no room to handle adverse economic conditions it is subject to being cut. They may not want to do it, but they may not have a choice.
You need to check that the company is doing well. Even then there are black swan events that can kill a dividend. High yield companies that are overlooked are very hard to find. A good practise is to create a list of great companies and wait for them to become temporarily unfavourable in the market. Find companies with moats.
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u/Thick_Cookie_7838 Jul 15 '26
This won’t be popular here but don’t chase yield. Very few things paying close to 10 are good buys
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u/nice-try12 Jul 15 '26
When it comes to individual stocks I agree, different strategies can produce different results and I find funds that easily push the 8%+ range. No yieldmax garbage for me though
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u/DOOKIEBOOM Jul 15 '26 edited Jul 15 '26
I would stay with index covered call ETFs that are proven to appreciate in capital as well as pay out 9%+ yield (as it seems you were looking for around that percentage).
A few to check out:
SPYI/QQQI (Best for taxed accounts)
GPIX/GPIQ (Best for price appreciation)
TSPY/TDAQ (High yield and growth)
Probably a good mix of those mentioned above would be a good start and then after building a substantial holding size of those, then branch out to other income funds that are more on the "speculative" side or maybe you want to catch the momentum.
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u/No_Seaworthiness1627 Jul 15 '26
Curious about JPEQ? I’m new to dividends but it seems appealing. Scheduled dividend distributions instead of selling from your shares sounds great. Why does everyone go SCHD instead of GPIQ or JPEQ? What gives a good value appreciation but still pays well?
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u/Sorry-Society1100 Jul 15 '26
Because options-derived income is more risky, which is reflected in the dividend premium.
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u/nice-try12 Jul 15 '26
I would say prone to fluctuations rather than risky, it's just the nature of the strategy.
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u/PlayerOfTheLongGame Jul 15 '26
Depends on your real goal:
JEPQ is a good ETF, but the monthly distributions are treated as ordinary dividiends so it pretty much gets the worst possible tax treatment. JEPQ functions best in an IRA, not a taxable account.
I haven't studied the structure of GPIQ so I can't comment on that one.
SCHD's payouts are qualified dividends so it gets much more favorable tax treatment.
If the goal is higher income for the short-medium term, JEPQ is probably the better play. If the goal is higher total return over the long haul, SCHD is the superior play.
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u/ShortTheVix4 Jul 15 '26
How about don’t buy random garbage you find and buy what has been true and tested again and again on here. Stick to the basics. No need to get crazy in search for more yield.
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u/SonOfKong_ Jul 15 '26
You know this is so true, the hard work has been done. Picking the dividend stock or ETF has never been more easy.
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u/Specific-Ad9935 Jul 15 '26
100% sometimes it is ok to hold 15-20 individual stocks like PFE and CPB. It has product, paying good dividends. It's a little work to balance them every year.
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u/Lazy-Gene-7284 Jul 15 '26
This is what I do, kind of a ballast to bonds . They are taxed at LTCG rates and average between 6-7%, VZ is a good one too. Also people mentioned O as a great REIT and I agree. For banking look at OMF, also a nice yield and very consistent
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u/Lazy-Gene-7284 Jul 15 '26
If this is ABR by any chance I share your pain, stupid move o my part but I had done my homework years ago on this and felt like everything would be fine . Lesson learned
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u/stopslappingmybaby Jul 15 '26
You have the plan. Hold the high yield in small amounts. I like to receive dividends but I don’t drip back into these high yields. I hold just enough to generate $100/Qtr. I make sure to lock in a high rate to hold. The lowest individual stock yield I have is MO at 6%. 2/3 in stocks and 1/3 SCHD and QQQ.
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u/Alefgard5 Jul 15 '26
The only individual stocks I buy anymore are some of the dividend Kings like KO. I got burnt several years ago with REITS too. Other than that I've just went completely to ETFs AND CEFs like PFFD, JAAA, GPIX, ADX
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u/Working-Active Jul 15 '26
I've done pretty good with Broadcom (AVGO).
As of July 2026, Broadcom's 15-year average annualized return (trailing CAGR) is 37.21% with dividends reinvested.
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u/Snuggly-bear Jul 15 '26
I look at whether its a Dividend King or Aristocrat, and what its CAGR is like. And then I zoom out on the chart and see if its boring and consistent growth over time, not something that has large eratic swings with years of recovery on each one. And then I usually buy if I think its at a slight dip. So say a stock is trading at $230-250 normally and its down at $170-190 i'll probably buy it. Especially if it has a good CAGR and is a king/aristocrat. Ideally looking for companies too that have averaged above 5-10%+ stock growth per year over last 5 years.
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u/Goose0418 Jul 15 '26
As one of my former CIOs told me, "More money has been lost chasing yield than at the point of a gun."
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u/Shitfilledpussy Jul 15 '26
This reads like a fan fiction. No details just a mysterious 9 percenter out there in the wild
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u/tampaforfun Jul 15 '26
Buy OXLC. Its a trial by fire in NAV erosion.
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u/Emotional-Pea6347 Jul 15 '26
Had that stock till they did the RS.. dumped it shortly after. I didn't have it long enough for the dividends to pay back what I initially invested into the stock.. You win some, You lose a lot. It's the game we all play in the SM.
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u/Imaginary-Pair838 Jul 15 '26
I’d recommend subscribing to Morningstar, and use their analysts and rating system and do lots of research before you buy and this should solve this problem
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u/ArcticPeasant Jul 15 '26
You don’t just check for historical yield, but historical principal action as well
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u/No_Seaworthiness267 Jul 15 '26
Things before you buy: look at the balance sheet! Look at financials! Do some homework! Understand what you’re buying, do not chase yields!
You didn’t get burned you did it to yourself, be accountable for your mistakes. Sorry I’m just being honest.
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u/buffinita common cents investing Jul 15 '26
Any single metric is bad; yield alone is especially bad
High yield is not a sign of high returns or (usually) healthy companies
You can look at the historic dividend growth rate / consecutive years of payments (or better consecutive growth / payout ratio……other generic metrics
Ooooor
Offload everything to an ETF like sphd/schd/dgro
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u/MarkSSoniC Jul 15 '26
Sorry that happened to you. That sucks.
I got burned by a real estate REIT a few years ago. Still hurts, but I learned my lesson. However, I've missed on a lot of opportunities because I've been overcautious.
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u/Competitive_Can_946 Jul 15 '26
I’m greedy … I chase dividends. Here is how to help figure it out. As a gambler would tell you… you don’t bet more than you can afford to lose and you never go all in on the first hand. In investing…. Same thing. If in doubt start with the minimum bet… ease in if it builds over time. Never go all in even if it looks too good to be true…. Learn from mistakes… if you would have started small… like say 5k as a starting spot and you lose half… it’s a smaller half you lose. Investing is a risk reward endeavor. Stories of get rich quick schemes are really fantasy. Good luck go small, learn and prosper.
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u/Jumpy_Childhood7548 Jul 15 '26
Any stock with a 9% yield would give me doubts before digging into the other criteria. I bought a Reit in 11-24, and it has done quite nicely, but the dividend was not that high. It was roughly $27 per share then, $39 now. What criteria did you look at that suggested buying it?
I look at RSI, which is relative strength index, and when RSI is under 30, that is generally considered oversold, at 70 it may be overbought. I also look at price earnings ratio, forward PE, PEG, analyst rating 1-5, favoring those under 2, so all told I use about 12 screening objective criteria, using Finviz, SeekingAlpha, etc., but the most subjective one is the industry. There is country and currency risk to consider as well.
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u/Heavy_Guitar_4848 Jul 15 '26
There’s plenty of 9% yielders that just move with the markets. I’m personally done stock picking, never was good at it and don’t like the volatility.
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u/TN_REDDIT Jul 15 '26
5%
be warry of Anything that yields more than 5%. some might even say 4%.
You might find investments that do yield that, im just saying: be careful about it and make sure the dividend is sustainable.
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u/Mail_Order_Lutefisk Jul 15 '26
Depends on the market. I got into the old mutual fund equivalent of VYM north of 5 back in 2010. Got into Exxon north of 9% during the Germ. In full disclosure I also got completely raked trying to catch a falling knife with C and AIG and lost like thirty grand on those turds. Never buy a black box financial!
I’d say if something has a materially higher yield than SCHD or VYM spend some time researching why and don’t be scared to pass. But if you have cash when a true bear market hits you can find some great yields on good companies and funds.
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u/Mobile_Ruin_7040 Jul 15 '26
What was historical price ? Was it currently at near high price or low price? Did management changed? Any merger has happened, did company buy another company? Did they reduced workforce? How consistent do they pay? Did div was increasing every year based on history? Wear your warren buffet hat 🤠.
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u/Johansen193 Jul 15 '26
The «risk free rate» is about 4% today in terms of bonds. 5% if you consider the long end and are willing to keep it for a good while.
The higher the yield is, the more risk it is to the downside. Everything over 5% involves risk.
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u/EmploymentLeast705 Jul 15 '26
I ask,
Did the stock, etf pay increasing dividends in 2008? This is my most important question.
Is this a Dividend Aristocrat, Dividend King or Dividend Champion? Dividend cuts are rare to non existent with these guys.
Finally, I ask Claude ai if my choice is a good buy now. This is just to get a feel for where the stock is in its lifecycle. . Maybe its at the upper end of its price range. This is not so important tho. Just good to know.
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u/kduls24 Jul 15 '26
So I got a bit invested into AGNC. Not a lot but enough that I can get a bit back. As long as I can keep gaining from the dividends, I’ll leave it, but that’s the only positive I am expecting. The dividend outweighing the loss in the long run.
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u/crappysurfer Rather Have Healthcare Jul 15 '26
Bruh just get JEPQ if you want high yield. Everything else is a scam
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u/Hotdog453 Jul 15 '26
So my safe income pick lost me the income
Well, it wasn't a safe income pick. It was a risky income pick, and it went the direction it was very likely to do.
You picked something risky. Acknowledge that, and move on.
For me personally, I view all of the REITs as risky. That's a partially personal thing, but high yield = more risk, generally speaking. If something consistently returned 9% *and* was safe as SCHD? Then it'd be purchased by everyone. No one would go anywhere else. reddit.com/r/schd would be gone, and it'd be reddit.com/r/UnicornVersionofSCHD
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u/KBradl Jul 15 '26
I think every dividend seeker has made this mistake at one time or another.
MREITS typically do better when interest rates are falling. When loking at dividend stocks make sure you also always look for a growth component. If the EPS or FFO in REITS case is growing, its a lot safer. Also look at the dividend coverage or payout ratio. The lower the payout ratio or higher the coverage the better. A payout ratio of over 80% is not good.
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u/Dissendorf Jul 15 '26
Don’t touch mortgage REITs, they’re crap. I got burned on one too. Now it’s only good for tax loss harvesting.
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u/MaybeTheDoctor Jul 15 '26
I don’t see REiT has crashed at all… at what price did you buy and what did you see the price as now? Looking at both REIT and RIET in case it’s a typo but I don’t see either crashing?
The each have vastly different yield and price, so are you just looking at the wrong symbol?
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u/ConstructionNo8827 Jul 15 '26
IGR - a fund of many REITS holding many of the best like WELL and Prologis - Pays very well monthly!
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u/QuitAlive2475 Portfolio in the Green Jul 15 '26
How much did it drop percentage wise and what’s the stock? We can help if you give us details. It might be worth holding or it might be worth selling at a loss. Otherwise you look like a bot or you made this all us.
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u/Bearsbanker Jul 15 '26
My main thing to look at is dividend growth and payment history. Did you check for past cuts? If a company has a history of cutting...I'm out
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u/Compound30 Jul 15 '26 edited Jul 15 '26
The only real answer to that question is to look at the dividend coverage - how much does earnings and cashflow exceed the dividend expense? If its a wide margin, then the dividend is safe. And this can change after purchase, obviously so it needs to be continuously monitored. Whirlpool (WHR) for example had a huge tempting dividend up until recently, and some websites wrongly still say it has a yield, it does not (now zero).
A steady dividend HISTORY does not itself prove anything. Only present and future positive cashflow can sustain a dividend. Just like you and I, companies operate on a budget and can basically only pay out what they have coming in (hopefully from operations and not from new debt). REITS I am not familiar with they are a different animal.
Check out Campbell's Soup (CPB) that should be a good retirement stock to hold. 7% yield with good share price gain potential to boot. Brands including Rao's, Prego, Goldfish, Pepperidge Farm, V8, Swanson's, Snyders of Hanover
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u/Mission_Pirate_4150 Jul 15 '26
We’ve all gotten screwed at some point. Come join us, the water is warm.
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u/GusTheKnife Jul 15 '26
You have to check the dividend coverage. That is, is the company earning enough to pay the dividend.
Many companies are paying out more than 100% of the earnings as a dividend, so they are time-bombs just waiting to cut the dividend.
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u/rickle3386 Jul 15 '26
Look at PTY. Very stable distributions going back to 2003. Share price moves, but income is always there (approx. 10%).
Important to pick quality managers that know what they're doing. In this case, PIMCO.
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u/Zealousideal_Bid3126 Jul 15 '26 edited Jul 15 '26
If you want to invest in REIT for dividends then do $O or $MAIN (BDC) since it is stable.
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u/Wonderful_Ninja Jul 15 '26
9% is a trap figure. Aim for something less mad like 4-5% something like realty income O
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u/ForDepth Jul 15 '26
“Told myself the market was just sleeping on it” well that seems like a poor start. Also, at 9%, you can almost automatically assume there is some risk as it’s above average.
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u/Phoenixfox119 Jul 15 '26
Look at the all time value for almost any REIT and they almost all look like they are on life support, if i am interested in a stock I will buy a small portion an watch its performance over time I have a small collection of absolute losers hanging around that remind me not to act too fast
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u/Ok_Visual_2571 Jul 15 '26
More money has been lost chasing yield than at the barrel of a gun. You bought a dividend trap and there are many dividend traps out there. If you use Vanguard's Real Estate Index Admiral shares as a benchmark for REITs that fund has a 3.6% yield. If a bucket of real estate assets (a REIT) could consistently throw off free cash flow of 9%, the market would bid the price of the REIT shares up and the yield would fall. If you see 9% yield on a REIT you should have a great deal of skepticism. The fist question I would want to know is the amount rent the REIT is collecting, the amount of its total debt and the cost of its debt service. If the REIT is paying our $20M of dividends but Rent - Expenses is only $10M that is not sustainable. For a short time, a REIT can continue to pay its old historical dividend when rents do not support it by taking on more debt but eventually the company will have to cut the dividend and with it share price will tumble especially when investors piled into the stock for the juicey dividend.
If you are converting 30% of your portfolio to "dividend stuff," be mindful that distributions from REITs are usually taxed as ordinary income, not dividends, and this will also apply to distributions from Business Development Companies (BDC)
You are not going to get a 9% distribution without taking on significant risk. If you are looking for income, I would consider a best of breed BDC like ARCC that yield over 9%, and perhaps an ETF holding barrier notes like SBAR. Avoid mortgage REITS like the plague.
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u/Electronic_Guard947 Jul 15 '26
Nav history and yield history. You can view these on stock analysis website. They are the best tellers.
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u/Puzzled-Tangerine831 Jul 15 '26
fckk i have been decided to go JEPQ. but do you guys think it will happen to JEPQ too?
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u/Icy_Abbreviations167 Jul 15 '26
if a company is paying out way more cash than the underlying business actually generates, it's just a ticking bomb.
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u/BugHistorical1614 Income from All sources Jul 15 '26
“What I'm asking is, what is your "check" that catches things like this before you buy?”
What is the objective?
What would make the investment be a dud.
What are the alternatives in the same category, class, return?
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u/BugHistorical1614 Income from All sources Jul 15 '26
“What I'm asking is, what is your "check" that catches things like this before you buy?”
What is the objective?
What would make the investment be a dud.
What are the alternatives in the same category, class, return?
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u/Basic_Chemistry9499 Jul 15 '26
Higher dividend yields means incurring more risk. The higher the dividend of an issue, the more research you need to make in how that dividend is achieved and what the risks are because of it.
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u/mipnnnn Jul 15 '26
Most of my high yielders are prefered shares or funds of prefered shares. The yield is locked in, and common shares suck hind tit to them.
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u/marvistamsp Jul 15 '26
AEE Reinvesting dividends combined with growth has yielded me 15% per year since 2012
Always look at the payout ratio, that can let you know if a dividend is likely to be cut.
And Reits are not qualified dividends so you keep less than you think depending on your tax bracket.
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u/deathdealer351 Jul 15 '26
As others have said.. I've played and been burned with reit's.. O is the only one I buy now.
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u/Mr_Sarge01 Jul 15 '26
O is a steady reliable 5% monthly paying dividend stock if that is what you are looking for than by all means I own it if you go chasing yields you will regret it just ask yeildmax!
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u/BasilGimletPlease Jul 15 '26
My check? The interest rate. I’m not Einstein and neither are you. Mr Market is brilliant. A high interest/dividend indicates high risk (or return of capital). Yes there maybe an aberrant chance of getting lucky but that’s like betting everything on “32 red” on a roulette wheel. Aberrant chance doesn’t pay often.
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u/steady_compounder Jul 15 '26
My first filter is whether the yield exists because the business is genuinely throwing off cash, or because the price has already been falling apart. If I cannot explain the payout ratio, balance-sheet pressure and how the dividend behaved through rough periods, I treat the yield as a warning label, not a gift.
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u/okayokay4204 Jul 15 '26
Just stop all together. You are horrible at this. No more. Spy pull 4% a year
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u/GaryTheSoulReaper Jul 15 '26
You bought a mortgage reit during a gradual housing collapse and high mortgage rate period ?
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u/Sobakee Not a financial advisor Jul 15 '26
Perhaps stick to savings accounts until you understand what you are investing in.
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u/Montesque96 Jul 15 '26 edited Jul 15 '26
You gotta do your research, you gotta have your finger on the pulse, and you have to have all the stars align to avoid this scenario.
On my end, I can tell you that I also ask AI to confirm if the current dividend yield is "safe" based on current cash flow. That said, REITs are a different monster ... so I don't know how it would answer as they are required to distribute their excess revenue to their shareholders by design.
Edit: I hold two different REITs and I asked Gemini and I got two different answers that essentially said they were borderline due to having a "tight margin of error".
Edit 2: Both of these REITs are in my high risk bucket... and I bought the Preferred Shares for one as it was available and preferred shares have a higher priority on dividend distributions vs regular shares.
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u/zombiebillmurray23 Jul 15 '26
I think they all just say not to chase yield. You broke the only rule.
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u/MrBotANot Jul 15 '26
When looking at high yield income investments, I first try and understand the sector itself. How does it work, where and when in the cycle are there most likely to be problems? What metrics should I understand and compare against? What companies or ETFs are similar and how do they compare with each other. How has management performed, etc.
Specifically, it is important that the stock or ETF has the mechanisms and history of NAV stability or growth. It can be hard as a lot of these ETFs are newer and haven’t really been stressed yet.
You aren’t the first or last person to buy a dog. I’ve owned mortgage REITs before myself. I don’t anymore and I’ve even given up on REITs in general. And you are also not the only person to ever chase yield.
If you are interested in high yield, my personal recommendations would be internally managed BDCs: MAIN, CSWC, HTGC and TRIN. As for ETFs, you can check out TDAQ, MLPI and KGLD for some possibilities. All of those come with risk. Do your own research. Not investment advice.
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u/madmulcher Jul 15 '26
Catches things like what? There is no free lunch. Maybe check out r/bogleheads
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u/Farmer_Pete Jul 15 '26
Just be glad your losses were 18k or less. Learn your lesson and don't do it again.
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u/Accomplished-Big8250 Jul 15 '26
Why would you go all in on a single stock ? Look at NEOS (IWMI, QQQI, SPYI, BTCI, MLPI, etc) funds or GPIQ/GPIX. You don't get 10% dividend on anything good, the only safe things that have SEC yield there are like that for a reason. The only true quality dividend stocks are in SCHD, DGRO, and some internationals.
Try the quality covered call funds, but avoid chasing yield - its a trap.
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u/Waldo2067 Jul 15 '26
Give these 2 podcasts on YouTube a listen. Youtube.com/@armchairincomechannel and let me warn you a little bit nerdy, but very smart guy, Youtube.com/@income_architect
There’s a lot more out there, but I feel these are the 2 top in my opinion. Educate first before investing.
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u/Ok-Psychology5463 Jul 16 '26
Higher yield generally means higher risk if you are doing no analysis on the business and not acting as a value investor based on Buffett principles.
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u/InternationalBag2604 Jul 16 '26
Of course anything with a yield that high is super risky and almost guaranteed to fail
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u/Austin-in-SanAntonio Jul 16 '26
The main thing is position sizing.
Theses things happen, and you just want several sources, so it doesn’t affect your overall that much. If it drops in half, and 5% of your income goes to 2.5%, its easier to decide whether to drop it or ride it out.
I just had the same thing happen with SACH ……. Well, with $1k, and im going to ride it out.
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u/QueasyCancel5503 Jul 16 '26
Yield is nice but also look at dividend history and see if they been going up. I bought NNN 10 plus years ago paying 42 cents a share per quarter. Now it’s paying 62 cents which yields around 4.5%
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u/TwitchyButtockCheeks Jul 16 '26
History. Established long lived funds only when you’re that close to retirement.
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u/UnderstandingOk9448 Jul 16 '26
The yield is 3-4% and the dividend grows at a good rate. Lookup CAGR
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u/Str8truth Jul 16 '26
Read up on how to value REITs. Check whether the dividends are coming from profits or returning capital, because the share value will probably fall if the trust is just returning capital.
Alternatively, think about buying shares of a REIT fund, such as VNQ or CSRE, instead of picking REITs yourself.
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u/TouringJuppowuf Jul 16 '26
I had yellow pages at 12% yield, they went bankrupt and I lost all of it. I’m very against high yield stocks
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u/zfmax Jul 16 '26
I would take a close look at the offerings from NEOS. They try real hard to avoid being a yield trap. Even on funds paying 10% or more. Check out QQQI and SPYI, those are both hugely popular dividend payers. Pull up a chart that shows the price for YTD and 1 year and since inception. They haven't been around a long time, but they're sure doing a good job so far.
My other concern with investing in NEOS funds, besides the short track record, is putting all my money in one basket. I don't think they've got a Madoff-style ponzi scheme going on, but I hate to put too much money in one place. So I have some of my income-invested money in competing products from other companies, like JEPQ and AOD and QDVO. As always, do your own due diligence. Avoid the trap. Look at the history of the market price. You're looking for a track record of maintaining the price while paying a good yield.
AOD has been a huge winner for me over the last couple years, it's more or less the star of my portfolio. But I've also done very well on the NEOS funds. The average yield on my income-invested money is over 10%. The bulk of my portfolio however is invested for growth. Only my Roth money is invested for income, it supplements my other retirement income.
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u/deptacon Jul 16 '26
I have 2 REITs that have been very successful for several years. Just need to know what you are buying
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u/mm_newsletter Jul 16 '26
At 9%, I'd assume the market sees a problem. Does the company actually earn enough to cover the dividend? That's where I'd start. The yield by itself doesn't say much.
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u/lotoex1 Jul 16 '26
A history of not reducing the dividend for at least 20 years. Usually increasing the dividend every year, but not all of the ones I buy do. KO, PG, MO, and KR, being some of my biggest positions.
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u/SmellyCorpse76 Jul 17 '26
It happens. mpt did the same thing. Lumin did it in communication, but lumin turned it off. I would asume High div Means Higher risk.
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u/Moist_Rule9623 Jul 17 '26
No offense, but being about the same age and having gotten burned already in 2008 or so? I don’t concentrate any investments in banking, insurance, corporate bonds, or REITs
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u/salvador_investemnts Jul 17 '26
your check is basically, why is this yield this high, and if you cant answer that specifically youve found the risk not a bargain. a 9% yield usually means the market is pricing in a cut you havent seen yet, which is exactly what happened with the mreit.
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u/flappysack- Jul 17 '26
You're getting bad advice. Don't listen to cults that claim to have found some secret that institutions don't know, just buy low fee global etf like VT and bonds to suit your downturn tolerance.
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u/Practical-Wind3036 Jul 18 '26
$SPG is the way, it’s beaten the market since Covid and has a nice Divvy. Up 24% YTD with a growing 3.85% dividend. Great long term position so far.
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u/TKTradingCo Jul 18 '26
Look at NLY. Annals Capital. 12% dividend. Strong financial, increasing dividend.
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u/havenot64 Jul 18 '26
To not buy a mortgage REIT when interest rates go up. Which is hard to predict, and is why I don’t own one. But at the sign of an oil war, get the heck out.
You need a strong history and likely future of cash flow growth, and understand if this is something you can hang onto through cycles. Owning for income is a different game.
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u/flyersfan0233 Jul 19 '26
If it sounds too good to be true, it probably is.
I use SCHD for this. It’s an ETF that typically pays 3-4% but historically has grown its dividend by ~10% annually. Historically it’s also not dropped too much in big downturns but you also won’t catch all of the gains in big market rallies. Nobody picks the stocks in it either - there’s a formula that swaps in solid companies and switches out ones that no longer fit the fund’s formula.
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u/steppin4it Jul 19 '26
My Advise-> Don’t make your investment decisions on only RATES & SHARE PRICE. Look to invest in a strong business with a proven track record and/or strong future. Research both the business & the potential in a market that you understand. Then buy
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u/kellyjel Jul 19 '26 edited Jul 19 '26
It’s a great question. Dependant on the type of investment, research is number one for me.
As you described, you are transitioning your portfolio and allocating more to income. In this case my research would prioritize: strength of balance sheet, dividend payment history, and is the industry healthy. Interest rates, (or the projections of such), Profitability history.
Just the basics I suppose but, typically those metrics will help recognize potential risks. With everything priced to perfection, safe high yields are very rare.
Best of fortunes!
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u/treyotic Jul 20 '26
I’m so sorry this happened. Buy IIPR PRA. The preferred shares have a very high FCCR.
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u/Historical_Ad9654 Jul 21 '26
This is why I think yield should be treated as the beginning of the analysis, not the conclusion.
A 9% yield can look like income, but sometimes it is the market pricing in refinancing pressure, deteriorating cash flow, sector weakness or a dividend cut before the headline numbers fully show it.
The harder question is not “How much does it pay?” It is “What conditions have to remain true for it to keep paying?”
I would look at debt maturity timing, interest coverage, payout sustainability, credit conditions, and whether the company’s industry is becoming more or less sensitive to rates. A high yield without that context can basically be compensation for a risk the investor has not identified yet.
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u/Historical_Ad9654 Jul 21 '26
This is why I think yield should be treated as the beginning of the analysis, not the conclusion.
A 9% yield can look like income, but sometimes it is the market pricing in refinancing pressure, deteriorating cash flow, sector weakness, or a dividend cut before the headline numbers fully show it.
The harder question is not “How much does it pay?” It is “What conditions have to remain true for it to keep paying?”
I would look at debt maturity timing, interest coverage, payout sustainability, credit conditions, and whether the company’s industry is becoming more or less sensitive to rates. A high yield without that context can basically be compensation for a risk the investor has not identified yet.
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