With these stocks, you can have your cake and eat it, too.

Most investors think they have to give up high-yielding dividends for long-term growth opportunities. But as you’ll see with these three under-the-radar stocks — that simply isn’t true.

EPR Properties ( EPR -2.21%), Rithm Capital ( RITM -1.70%), and Medical Properties Trust ( MPW -2.98%) are all paying dividend yields of 5% or more and have long-term growth opportunities. Here’s a closer look at the stocks three Motley Fool contributors believe are great income stocks to hold for the long haul. Let the fun begin

Liz Brumer-Smith (EPR Properties): It’s no surprise that share prices for EPR Properties, the premier entertainment real estate investment trust ( REIT ), which owns just over 350 different entertainment properties across the country, have been absolutely crushed. COVID-19 temporarily shuttered most entertainment venues.

Movie theaters, gaming and dining destinations, concert venues, ski lodges and resorts, museums, and countless other cultural, arts, and entertainment properties battled closure mandates and decreased demand for over two years. But thankfully, demand for experiential activities is back in a big way.

The company’s earnings for the past few quarters have been outstanding. Its adjusted funds from operations (AFFO), a key financial metric for REITs , grew by 94% year over year as of the second quarter of 2022.

But EPR Properties isn’t totally in the clear. One of its top-10 tenants, Cineworld Group , the parent company of Regal Cinemas, is preparing to file for bankruptcy , which has caused some volatility in its stock price lately. However, EPR Properties has more than enough cash on hand to help it sustain a blow like this. Not to mention its low ratio of debt to earnings before taxes, interest, amortization, and depreciation (EBITDA) of around 5.1 times and a payout ratio of 67% means the company should have no problem maintaining its high-yielding dividend return — which is paid monthly.

COVID-19’s impact on the entertainment industry was temporary. Long-term, I still believe people will want to participate in experiential activities, making EPR Properties a fantastic long-term buy given its high dividend yield of 6.7% today. A mortgage REIT with low interest rate risk

Mike Price (Rithm Capital): New Residential recently rebranded itself as Rithm Capital as part of a transition to internalize its management team and no longer be externally managed by Fortress Investment Group. Management expects this move to save the mortgage REIT (mREIT) around $60 million per year. For mREITs, any little bit of operating expense reduction helps.

Mortgage REITs borrow money and invest in mortgages or mortgage-backed securities (MBS). Typically, the mREIT has a strong balance sheet that allows it to borrow at a low rate and earn the spread on the difference between that low rate and the mortgage rate.

It’s a nice business model that churns out plenty of cash flow to pay super high dividends in the good times. For example, Rithm’s dividend yield is currently over 10%. The problem is when interest rates rise .

Most mREITs major in long-term investments — they have to because residential mortgages often have 30-year terms and basically all of them have at least 15-year terms. But their financing sources are short-term. That means when rates go up, they have to refinance at a higher rate while their cash flow stays the same. The spread gets thinner. This logic led to basically the entire sector having a down year.

Rithm isn’t as vulnerable to interest rate risk as its competitors. First, it has $1.6 billion in cash to make new investments or pay off debt if it needs to. Second, a recent acquisition gave its portfolio exposure to a portfolio of short-term “bridge” loans with an average rate of 7.8%. Finally, the REIT has a significant investment in mortgage servicing rights (MSRs), which increase in value when interest rates rise.

Rithm services the mortgage that it owns MSRs for, which means it collects payments, runs escrow accounts to pay property taxes and insurance, and interfaces with borrowers when necessary. The lender that holds the mortgages pays it a fee to do this. When interest rates go up, fewer borrowers refinance out of their mortgage, which would make the right to service their loan worthless.

Rithm Capital has the same high double-digit dividend yield as many of its competitors, but it may be uniquely able to fight off higher interest rates — meaning you won’t have to worry about that dividend getting hammered over the next few years. Specialty medical facilities with a […]

source 3 Under-the-Radar Dividend Stocks With Yields of 5% or More

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