Real estate investment platform Arrived pays hefty monthly dividends that are attractive compared to some of the better-known listed REIT (real estate investment trust) stocks. Arrived allows individuals to invest in residential homes and vacation rentals starting at just $100 and manages all the nitty-gritty associated with real-estate investments. In return, individuals earn monthly dividend income, which is calculated as the cash flows from the properties after paying for expenses and reserves.
Dividend Yields on Arrived Investments
Arrived investors can earn two types of income: dividend income and appreciation on the property prices when a property is sold. What’s more, investors have the option to participate in the partial home ownership structure on Arrived’s platform and two funds operated by the portal. One is the Single-Family Residential Fund (SFRF), backed by a pool of real estate assets of residential properties, and the other is the Private Credit Fund (PCF), which is backed by private credit debt investments that are used for home renovations and construction.
The SFRF had a 4.04% average annualized dividend yield in 2024, while the PCF boasts an 8.1% annualized dividend yield since August 2024. Turning toward appreciation potential, the typical holding period for rental properties is 5 to 7 years, while it is 5 to 15 years for vacation rentals. If an investor wants to sell his/her shares in SFRF and PCF funds, there is an initial lock-in period of six months. Following the lock-in period, investors can make quarterly redemptions with a limit of 5% of fund shares per quarter.
Arrived made its first-ever property sale in October 2024, which generated a total return of 34.7% (11.2% annualized) for investors. However, not all properties can earn a similar return, as each property is different with a lot of variables attached.
Arrived vs. Public REITs’ Dividend
Let’s learn about three listed REITs that pay attractive dividends. Interestingly, none of these listed REIT players in the residential properties segment pay monthly dividends like Arrived. Hence, we will be comparing the annualized dividend yields with those offered by Arrived. According to TipRanks’ database, the REITs sector carries an average sector dividend yield of 3.39%.
Mid-American Apartment (MAA)
Mid-American Apartment (MAA) REIT is an S&P 500 (SPX) component. MAA invests in quality apartment communities in the Sunbelt region of the U.S. MAA pays quarterly common stock dividends, with a current dividend amount of $5.924 per share and a dividend yield of 3.9%.
The MAA stock has a Moderate Buy consensus rating based on eight Buys versus nine Hold ratings. Also, the average Mid-American Apartment price target of $164.91 implies 9.6% upside potential from current levels. In the past year, MAA shares have gained 15.4%.
Invitation Homes (INVH)
Invitation Homes (INVH) is also an SPX component. This REIT invests in single-family home properties. INVH carries an above-sector average annualized dividend yield of 3.64% and pays quarterly dividends of $1.129 per share.
On TipRanks, INVH has a Moderate Buy consensus rating based on five Buys and nine Hold ratings. The average Invitation Homes price target of $36.38 implies 16.2% upside potential from current levels. Meanwhile, INVH shares have declined 5.3% in the past year.
AvalonBay Communities (AVB)
AvalonBay Communities (AVB) invests in multifamily apartment homes across 12 states and Washington, DC. AVB also pays quarterly cash dividends of $6.8 per share, reflecting an annualized yield of 3.12%.
Similar to the above two REITs, AvalonBay also has a Moderate Buy consensus rating based on eight Buys versus seven Hold ratings. Also, the average AvalonBay Communities price target of $241.53 implies 10.7% upside potential from current levels. In the past year, AVB shares have gained 24.4%.
Ending Thoughts
Investing in Arrived as an alternative to public REITs could be a good option if you have a long-term holding capacity. Investors can earn both monthly dividends and appreciation on the property once it is sold. Arrived boasts attractive dividend yields for now, although the company is relatively new compared to the three listed REIT players.
Some of the other notable benefits of Arrived versus the public REITs are a more simplified structure and transparency regarding the properties in which it makes investments. Plus, Arrived investments are less volatile, as REIT stocks trade on exchanges. However, REIT shares have more liquidity than Arrived investments.
This article was written in partnership with Arrived. TipRanks may be compensated for its publication.