Safe Dividend Investing
In 2000, I lost $300,000 in mutual funds that an investment advisor had put my lifesavings into.... I lost it because I had entrusted it to an industry that does not educate investors nor encourage them to look closely at what that industry is doing with their money..... I set out to find a better, safer way to invest..... My podcasts relate to what I learned in creating a generous, reliable income and in growing my wealth.... A few of the more important lessons I learned and explore are:.... (1) It is critical that you become a self-directed investor.....(2) If you can not easily measure the risk and potential in an investment, then do not invest in it. This excludes from your portfolio bundled investment devices, like mutual funds, ETFs and Index funds,..... (3) Financially strong companies who have paid “good dividends” for decades will continue to stay strong and continue to pay good dividends because it is both part of their "character" and in their executives selfish interest.....(4) Diversification is critical. Investing equally in the best 20 strong dividend stocks is the ideal.....A portfolio of 20 limits your risk in any one stock to 5% of your wealth..... No matter how strong you think a stock is, do not fall in love with it..... I have lived very well off my steady dividend income for 18 years, through two market crashes and one pandemic. I have watched my portfolio’s capital more than triple from where I started, despite taking out a generous dividend income every year to live on... In charts, for my second investment book,(Safer Better Dividend Investing), I spent months scoring all 628 dividend stocks paying dividends of 6% or greater traded on the TSX, NYSE and the NASDAQ. I discovered dozens of stocks that can provide not only a generous dividend income but outstanding capital growth.....Financial independence is realizable for careful, patient, dividend investors.
Safe Dividend Investing
Podcast 288 - INVESTMENT RISKS IN EQUITY REITS AND MORTGAGE REITS
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Welcome to Safe Dividend Investing’s Podcast #288 on August 15th of 2026.
Equity Real Estate Investment Trusts invest in office buildings, apartments and stores and Investors make money from rents. Mortgage Real Estate investment Trusts make money from interest and pay much higher dividend yields than Equity REITs, often in the 15% to 16% range. These high yields obviously attract income-seeking investors. However, today we explore the heightened risks in mortgage REITs that you must consider.
200 million Americans own REITs either directly or through ETFs and pension funds. 5 trillion dollars is invested in them. Since being introduced in 1960 they have become a mainstream asset
Let my other 287 podcasts and my 7 books help develop your investment confidence.
Ian Duncan MacDonald
Author and Commercial Risk Consultant,
President of Informus Inc
2 Vista Humber Drive
Toronto, Ontario
Canada, M9P 3R7
Toronto Telephone - 416-245-4994
imacd@informus.ca
PODCAST 288
15 August 2026
IS A 13% DIVIDEND PAYING REIT SAFE?
Greetings to investors all around the world. Welcome to Save Dividend Investing’s Podcast #288, recorded on August 15th of 2026. My name is Ian Duncan MacDonald. I am the author of seven investment books.
To learn more about my investment books visit www.amazon com and do a search for “Ian Duncan MacDonald books”. At Amazon you can find sample chapters and reviews by investors who have benefited from the books. More information is also available on my website.
Earlier this week in my daily feed from dozens of investment information sources, I came across an article from The Motley Fool directed at income investors who love high dividend yields. It suggested that investors should avoid investing in any stock offering a dividend yield greater than seven percent because it might be a trap luring you into purchasing a stock with major problems. However, the article then went on to recommend the Slate Grocery REIT (trading in Canada and the United States under stock symbols SGR.UN.in Canada and SRR TF in the United States). Slate is currently paying a 7.26% dividend yield. It specializes in owning grocery store based real estate across the USA
For decades, I have owned REITs. My REITs have provided me with reliable high dividend yields ranging between 6.73% and 8.09%. This is significantly higher than what my bank, insurance companies and other stocks pay. My REITS add tens of thousands of safe reliable dollars to my income each year.
After I scored Slate Grocery, I was not sure why the Motley Fool analyst chose it. There are several other REITs that are stronger and pay much better dividends. Perhaps Slate is their example of the norm for REITs.
When I ran Slate through the IDM stock scoring software, its total score for the 11 scored items was 56 out of 100. Which is an acceptable score but not outstanding. I personally avoid stocks scoring under 50. Very few stocks ever score over 70.
This REIT owns and operates a portfolio of over 110 retail properties across the U.S. Typically the properties have secondary retail tenants such as dentist offices, fast food restaurants and bank branches who benefit from the foot traffic going to the grocery store that anchors each commercial property. These smaller retail tenants safely diversify Slate’s income base at each plaza. The small retail outlets renters are not as sensitive to frequent rent increases as the main grocery store would be.
Slate was first listed in the stock exchange for $12.90 a share in April of 2015. Almost immediately it paid a dividend of $0.06. This amount was increased to a dividend of $0.07 when its share price reached $10.90 in September of 2016. Since 2016 it has now paid a steady $0.07 every month, even during Covid pandemic in 2020 when its share price dropped from $13.40 on January 30th to $6.38 on March 20 of 2020. Since 2020 its share price reached a high of $13.33 in May of 2022. It is now $12.48. Slate’s reliable steady dividend payouts are signs of a well-run company. However, the share price has shown little capital gain, which is not unusual for REITS which are generally purchased for their steady income.
While Motley Fool thinks that their classifying Slate as “strong” is all you need to know before you buy It. I think it is always important that you always verify a stock’s strength yourself. Go to the stock information source that you use to analyze a stock. My source of detailed information on stocks is the free TD Bank self-directed investment research database. Occasionally I have also used Yahoo Finance database. When I went there, I found that the strongest data factors for Slate are its Operating Margin of 61.11% which gives it a score of 8 out of 10. Its Price to Earnings ratio of 16.7x which also resulted in a score of 8, as did its Dividend yield percent of 7.21%. With only 27,076 shares of Slate shares traded, the subsequent score of 4 out of 10 added little to the total score of 56. Its weakest sub score factor is that no analysts are recommending it as a stock to buy. Since REITS are usually invested in rental property, they generally have high operating margins and high book values. Slate would thus be a suitable example for the Motley Fool analyst to choose.
When I put all nine factors through my stock scoring software it calculated that Slate had a total score of 56 out of 100. I personally avoid stocks scoring under 50. At 56 it would be a stock I would consider buying. However, with a little effort you could find other REITS that also have acceptable scores and pay a higher dividend yield.
One of these higher dividend yielding REITs I came across was Innovative Industrial Properties (IIPR). It is traded on the New York Stock Exchange Slate on the Pink Sheets – the Over the Counter Exchange where less established, more speculative stocks are listed.
IIPR had a unit price of $57.70 which scored 9 out of 10. Its price in 2022 was $92.91 which also scored 9 out of 10 as did both its book value of 65.95.and its price-to-earnings ratio. What dragged IIPR’s total rating down was a low operating margin of 1.44% and its high dividend yield percent of 13.17%.
Interestingly if the dividend yield percent had been 10%, it would have got a score of 10 out of 10 instead of the 3 out of 10. In designing this scoring system, I accepted the traditional belief that a very high dividend yields was the sign of a possible problem stock that had deliberately increased the dividend payout to distract investors from its weaknesses. The result was that IIPR’s calculated total score is a 54 instead of a 60.
The interesting question is why was this REIT able to pay a dividend of 13.17%? Is it because they focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed cannabis facilities? As alcohol sales declined has the younger generation switched to marijuana was? Has IIP taken advantage of this trend?
IIPR owns approximately 111 properties with 8.9 million rentable square feet in 19 states: Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington. Does this coverage indicate they have potential for expansion to the other 31 states? With $2.5 billion of invested capital this is a large established REIT.
I doubt that marijuana stores were considered when Real Estate Investment Trusts (REITs) were created in the USA in 1960. The law was passed aimed at democratizing large-scale real estate investments. The purpose of the law was to allow anyone to easily buy shares of income producing properties, the same way they could buy corporate stock without the complications and responsibilities of directly owning the rental properties.
The new REIT law let companies avoid corporate income tax as long as the REIT distributed at least 90% of their taxable income to shareholders. Since then, REITs have been an important source of funding for the construction of apartment buildings, malls, data centers, cell towers, hospitals and warehouses.
REITs used as a tax shelter by the 1990s resulted in institutional investors turning REITs into a mainstream asset, controlled by professional corporate management. In the United States there are now over 225 REITS traded on the New York Stock Exchange and the NASDAQ. In Canada there are another 40 listed on the Toronto Stock Exchange. Access to both countries REITs is easily available.
The popularity of REITs led to the creation of several ETFs that invest only in REITS. About 30% of these REIT Exchange Traded Funds are paying dividends of 7% or more. Almost 200 million Americans now own REITS directly or through ETFs and pension funds. Almost five trillion dollars in assets are owned by the North American REITS. It is not unexpected that they have spread to other countries around the world such as Japan and Australia.
Equity REITs that own and rent apartments, offices, and stores make money from rent. They offer greater stability and long term value than Mortgage REITs which buy or make real estate loans and sell mortgage-backed securities. Mortgage REITs make money from interest and usually pay a much higher dividend yields than Equity REITS.
Mortgage real estate investment trusts traditionally offer a high dividend yield of 15% to 16%. This naturally attracts income-seeking investors. However, the high yield reflects the substantially higher financial volatility and the heavy use of borrowed money to buy mortgage-backed securities which can amplify any gains or losses. This heightened sensitivity to changing interest rates can quickly erode the book value of holdings when mortgage rates drop quickly. As well, when homeowners refinance their mortgages to take advantage of lower rates this can disrupt mortgage REITs anticipated cash flows. Since their earnings per share can greatly fluctuate significantly, their net income may not always be enough to cover their high-dividend payouts.
If you are considering investing in a mortgage real estate investment trust, always do a Google search with the name of the company followed by the words “legals and complaints”. Do not be surprised if you come across litigation going back for decades. A mortgage is a legal commitment where a borrower pledges real estate to secure their loan. If for some reason the real estate is now worth only a fraction of what was borrowed to acquire it, the borrower is still responsible for paying off that mortgage loan. Since the lender no longer has the full property value as security, and getting paid in full may be in doubt, the lender may be willing to sell their mortgage document at a greatly discounted price. The purchaser of this document, which may now be a real estate investment mortgage trust, will now be the one responsible for collecting the payments from the debtor. The sale of shares in the real estate investment trust raises the money to buy the mortgage paper and covers other expenses like the monthly high dividend payouts to its shareholders.
Mortgage real estate investment trust litigated disputes can take decades to resolve. Hundreds of millions of dollars may be involved. For expediency, many of these legal actions will often be settled before trial for a fraction of the amount initially claimed. The typical Mortgage REIT involved in litigation will defend itself by blaming “market conditions”, while the plaintiff will blame the mortgage REIT’s aggressiveness and recklessness.
To own a mortgage REIT can be an investment risk. I always recommend investing equally in twenty different diversified stocks so that if a serious problem arises with one stock, the most you could lose is five percent of your wealth. That loss would be offset by the dividend yield from the other nineteen stocks paying dividend yields greater than 5%.
That’s all for this week, folks.