Seeking Passive Income? This ‘Strong Buy' Dividend Stock Yields 8.6%.
Among the leading high-yield dividend stocks, CTO Realty Growth (CTO) stands out for its high yield of 8.6% and sustainable payouts. Moreover, analysts have a 'Strong Buy' consensus rating on the shares of this real estate investment trust (REIT), indicating that they are confident about its prospects.
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CTO Realty Growth owns and manages high-quality retail properties across some of the fastest-growing markets in the U.S. It focuses on building community hubs that generate solid tenant demand. The REIT's portfolio is built around multi-tenant spaces anchored by essential businesses such as grocery stores, lifestyle retailers, and service providers. These types of tenants ensure consistent foot traffic and create a more resilient tenant mix, which is key for stable cash flow, especially in uncertain economic conditions.
The REIT also focuses on acquiring high-potential properties and then increasing value through leasing vacant space, raising below-market rents, and redeveloping key assets. This strategy enhances immediate income and builds long-term value across its portfolio.
CTO also benefits from its external management role and ownership interest in Alpine Income Property Trust (PINE), another publicly traded REIT. This relationship broadens CTO's exposure to income-producing real estate and further diversifies its revenue base.
The REIT's operational performance remains solid, reflected through strong leasing activity. In the first quarter of 2025, CTO signed over 112,000 square feet of new leases, renewals, and extensions at an average rent of $24.14 per square foot. This was about 25% above its existing portfolio average and highlights the strong demand for CTO's properties and its ability to drive rental income higher over time.
At the end of the latest quarter, CTO's portfolio was 93.8% leased and 91% occupied. The REIT has a pipeline of signed leases not yet generating rent that equates to about $4 million in annual base rent, roughly 4% of current cash rents. These leases are expected to begin contributing in the back half of 2025, further strengthening its performance.
Further, its development plans also remain solid. CTO continues to make progress on lease negotiations for its 10 acres of undeveloped land. As this site and other leasing deals come online in the second half of 2025, they are expected to serve as a strong growth engine into 2026. Further, despite ongoing concerns around macroeconomic headwinds like trade tariffs, CTO appears well-insulated, thanks to its focus on high-growth markets, diverse tenant base, and well-located properties.
CTO also made a notable acquisition in the past quarter, Ashley Park, a 559,000-square-foot open-air lifestyle center in the Newnan submarket of Atlanta. Acquired for $79.8 million, the center has multiple upsides, including significant leasing potential, under-market rents, and a purchase price far below replacement cost. The acquisition brings immediate scale and future income growth.
Notably, CTO has been re-leasing anchor spaces vacated by bankrupt tenants at the end of 2024 and early 2025. CTO has already re-leased two vacant anchor spaces and is close to finalizing deals on two more. Management remains confident in achieving a 40% to 60% positive cash leasing spread from these re-leases, which would provide a meaningful boost to income.
In summary, CTO Realty's focus on high-quality tenants, properties in high-growth markets, strong occupancy rate, and a solid pipeline of lease commencements positions it well to deliver steady growth and will support its dividend payouts.
Wall Street analysts recommend a 'Strong Buy' consensus rating on CTO Realty stock amid macro uncertainty. Moreover, it pays a quarterly dividend of $0.38 per share, reflecting an attractive yield of 8.6%, making it a compelling income stock.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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