Become Uncle Sam's landlord: Earn yields up to 16.4% with these REITs that rent to the US government

Jing Pan

Sat, Dec 31, 2022, 5:00 AM 4 min read

If you’ve ever been a landlord, you know finding reliable tenants is everything. Tracking down late payments every month makes your passive income stream a lot less passive.

That’s one reason why so many investors like real estate investment trusts (REITs) — publicly traded companies that collect rent from their properties and pass it along to shareholders in the form of dividends.

Investors don’t have to worry about screening or evicting tenants. Instead, they simply sit back and enjoy the dividend checks rolling in when they pick a winning REIT.

And some REITs have seriously blue-chip tenants — including the U.S. government. We all pay taxes, so why not get some money back in quarterly distributions?

Here are a couple ways to act as landlord to Uncle Sam. With markets being volatile, a steady stream of rental income might make you sleep better at night.

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Easterly Government Properties (DEA)

Easterly is not the largest REIT on the market, but it stands out among its peers for a very simple reason: The company’s mission is to acquire, develop and manage commercial properties leased to the U.S. government.

In its latest investor presentation, the REIT said 98% of its lease income is “backed by full faith and credit of the U.S. government.” Few tenants are more reliable.

As of Sept. 30, Easterly’s portfolio consisted of 86 properties totaling 8.7 million square feet. They were 99.3% leased, with a weighted average remaining lease term of 10.5 years.

In July of 2021, the company raised its quarterly dividend payout to 26.5 cents per share. At the current share price, that translates to an annual yield of 7.8%.

While Easterly might seem like an obvious choice, given the caliber of its tenants, the stock is actually down 39% over the past 12 months.

And that could give contrarian investors something to think about.

While Easterly has received an average rating of Hold from Wall Street analysts, their average price target of $17.25 is 24% higher than where the stock sits today.