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As the Federal Reserve signals a shift toward lower interest rates, Real Estate Investment Trusts (REITs) emerge as attractive dividend-paying investments. REITs, which own and manage income-producing properties, are legally mandated to distribute at least 90% of their taxable income as dividends. Historically, REITs have consistently offered dividend yields that surpass the S&P 500 average, making them valuable for income-focused investors seeking diversification in volatile markets.
REITs operate across various segments of the real estate market including commercial properties, residential units, and mortgage-backed securities. Each sector carries distinct dynamics and risk profiles. Some REITs focus on tangible real estate assets, while others specialize in financing real estate through mortgage investments. This article examines three notable REITs: EPR Properties, Starwood Property Trust, and AGNC Investment Corp., each offering unique exposure and opportunities amid the anticipated Federal Reserve easing cycle.
EPR Properties is an equity REIT specializing in the "experience economy," focusing on entertainment and leisure venues. Its portfolio is valued at approximately $7.35 billion, encompassing 329 properties across 43 U.S. states and Canada, leased to over 200 tenants. The company operates under a triple-net lease (NNN) model, where tenants cover property taxes, insurance, and maintenance, ensuring steady cash flow with minimal landlord overhead.
With a 99% occupancy rate and annual rental escalations between 1.5% and 2%, EPR's weighted average lease term (WALT) extends 12 years, offering stability and predictability in rental income.
EPR’s key performance metric is EBITDAre, a measure of earnings before interest, taxes, depreciation, and amortization, adjusted for real estate-specific items. The portfolio’s EBITDAre is dominated by entertainment-related properties (94%), including cinemas (38%), "Eat & Play" venues like Topgolf and karting centers, ski resorts such as Vail and Camelback, theme parks (Six Flags), and fitness centers. The remaining 6% is derived from education properties, including preschools and private schools, which the company plans to divest as part of a strategic focus shift.
In response to challenges facing the cinema industry due to streaming competition, EPR is reducing its exposure to this segment while increasing investments in assets with strong entry barriers, such as ski resorts and theme parks. This transition aims to enhance portfolio resilience and growth prospects.
In the first half of 2025, EPR reported Funds From Operations (FFO) per share of $1.26, surpassing revenue forecasts with $178.1 million in revenues. The company guides full-year FFO between $5.00 and $5.16 per share, representing 4.3% growth over 2024, alongside planned capital expenditures of $200-$300 million.
EPR pays monthly dividends yielding 6.17%, supported by an AFFO yield of 8.8%. The payout ratio of approximately 70% leaves a 30% buffer for growth and contingencies. Dividend growth averages 3.4% annually over the past three years. Though dividends were paused in 2020 due to pandemic pressures, payments have since resumed steadily.
Investment Verdict: EPR offers a discounted entry point relative to blue-chip REITs, with a transforming portfolio, robust margins, and an appealing monthly dividend, suitable for income investors with moderate risk tolerance.
Starwood Property Trust, led by Barry Sternlicht of Starwood Capital Group, is the largest U.S. commercial mortgage REIT, operating a diversified "multi-engine" model that includes commercial loans, real estate ownership, infrastructure lending, and net lease properties. This diversification enables flexibility in capital deployment.
As of Q3 2025, Starwood’s asset base totals $29.9 billion spread across:
In 2025, Starwood acquired Fundamental Income, a $2.2 billion net lease REIT previously owned by Brookfield. This portfolio comprises 475 properties totaling roughly 13 million square feet, spread across 43 states with 92 tenants evenly split between retail and industrial sectors.
The Fundamental Income portfolio features a lengthy weighted average lease term of 17.1 years, with annual rent escalations of 2.25%, offering inflation protection. Two-thirds of leases are master leases, reducing default risk. Annualized base rent totals $149 million.
Starwood’s strategy hinges on expectations of declining long-term rates, which would increase the value of these long-duration fixed cash flows through cap rate compression. In a high-rate scenario, income remains stable but growth is limited.
Starwood invested $4.6 billion in new assets during Q3 2025, with over $10 billion deployed year-to-date. The company pays a consistent quarterly dividend of $0.48 per share, maintained for over a decade—a notable achievement for a mortgage REIT.
The stock currently trades near book value with a price-to-book ratio around 1.0, reflecting a fair valuation that emphasizes dividend income over capital appreciation.
Investment Verdict: Starwood is well-positioned for investors optimistic about interest rate declines and chairman Sternlicht’s track record, offering diversified exposure with a generous 10% dividend yield.
AGNC Investment Corp. is a leading agency mortgage REIT, primarily investing in agency mortgage-backed securities (MBS) guaranteed by government entities such as Fannie Mae and Freddie Mac. These guarantees virtually eliminate credit risk, placing interest rate sensitivity at the forefront of the company’s risk profile.
AGNC profits from the spread between yields on long-term MBS and the short-term borrowing costs secured through repurchase agreements (repos), with leverage levels typically between 7 and 9 times equity, amplifying exposure to interest rate changes and yield curve movements.
As of September 30, 2025, the portfolio composition was:
AGNC has posted four consecutive quarters of positive Net Interest Income (NII) since Federal Reserve easing began in September 2024, signaling a turnaround from prior losses. Year-over-year NII figures illustrate this trend:
This improvement stems from a 19.4% increase in interest income coupled with a 7.9% decrease in funding costs, a favorable result of falling short-term rates outpacing declines in long-term MBS yields.
Book value per share increased, with net book value at $8.28 (up 6% quarter-over-quarter) and GAAP book value at $8.77 (up 5.5%). The P/B ratio of 1.16x exceeds historical averages, reflecting market optimism toward further rate cuts.
The Federal Reserve’s median projections forecast fed funds rates holding near 3.5% in late 2025, then decreasing to 3.25%-3.5% in 2026, and eventually dropping to 3%-3.25% by late 2027—indicating about two additional 25 basis-point cuts. Such easing would likely enhance MBS prices, reduce funding costs, boost NII, and possibly increase dividends (similar to Annaly’s recent 7.7% dividend increase).
Investment Verdict: AGNC provides a leveraged, direct play on Fed easing with an attractive 14% dividend yield, suitable for risk-tolerant investors willing to accept portfolio volatility for high income.
These three REITs offer complementary strategies and risk profiles across the real estate and mortgage sectors, enabling investors to tailor allocations based on risk appetite:
The Federal Reserve’s interest rate trajectory remains the key market driver. Continued easing is expected to benefit AGNC through asset appreciation, reduce STWD’s funding costs, and increase the appeal of EPR’s dividends as Treasury yields fall. Active portfolio rebalancing keyed to macroeconomic developments is essential for investors seeking stable income and growth within an evolving REIT landscape.
Start your investment journey with 8FIGURES and unlock the potential of dividend-paying real estate assets in a changing Federal Reserve environment.
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