This Week's Top REIT Pays a 6% Dividend Yield

The recent cut in interest rates has investors looking at high-dividend stocks, and the best of these right now are real estate investment trusts (REITs).

In fact, our top REIT today offers a 6.23% dividend.

Not only that, but some REITs offer potential price appreciation along with their high yields. So today's best REIT can offer great returns to investors on top of a solid dividend.

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REITs are largely alternative investments in the real estate sector.

Many people think of real estate investment as buying properties for investment, such as a house or apartment building. REITs, by contrast, are organizations that buy real estate properties and manage them. They often specialize in a particular type of real estate, such as hospitals, prisons, apartment complexes, or shopping malls.

REITs are less risky than investing in a single property. They are diversified across geography, and many are diversified across sectors. As a result, the chances of a REIT's value rising significantly is increased.

What REIT investors purchase is a stock whose price is based on the underlying real estate and its management.

We're able to determine the best REITs through our proprietary Money Morning Stock VQScore™ system.

It surveys the market for investments that show the greatest earning potential. It gives each a score from 1 to 4.9. The higher the score, the more likely a big stock price jump is imminent.

Our best REIT gets a score of 4.3, placing it right in the "Buy Zone."

The Top REIT for Purchase This Month

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]MGM Growth Properties LLC (NYSE: MGP) invests in entertainment resorts and popular gaming destinations. Its assets include hotel and convention centers, entertainment centers, retail spaces, and casinos.

The gaming REIT sector is very specialized. Just three REITs focus specifically on it, but the sector is very lucrative.

MGP became a public company three years ago.

Its main competitors, Gaming and Leisure Properties Inc. (NASDAQ: GLPI) and VICI Properties Inc. (NASDAQ: VICI), went public six years ago and last year, respectively.

So, REITs in the gaming space are relatively new. Wall Street is still wrestling with the correct valuation for its assets.

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That means investors in MGM now have an opportunity to benefit from pricing anomalies.

Assets in gaming REITs are still undervalued. It may take some time for investors to adjust and value them like they value the extremely lucrative REIT markets like healthcare and deluxe property operators.

For its part, MGP management observes that many of the biggest casinos in the United States enjoy three to four times the cash flow of malls like Hawaii's Ala Moana and New York's General Motors building.

In its space, MGM is at the top of the food chain. First, the MGM name is known and trusted by both investors and consumers. Second, the company has a strong portfolio and an advantageous lease structure vis-à-vis its tenants.

Eleven Las Vegas resorts and casinos in other high-growth markets across the United States fill the MGM portfolio. It owns, for example, the Park in Las Vegas, the MGM National Harbor in Maryland, Empire Resort Casino in Yonkers, N.Y., and MGM Northfield Park in Northfield, Ohio. The properties include 2.71 million square feet of convention space, 27,400 hotel rooms, 300 food and beverage outlets, 150 retail outlets, and 20 entertainment venues.

In total, all the assets result in a $7.67 billion market capitalization. Plus, given the quality of the assets, the spaces have been able to charge higher rents recently.

MGM has been able to raise its rates for customers 1.8%, on average, every year. The tenants are also responsible for every capital expenditure under the net lease structure, which benefits the company overall.

The assets regularly return capital to the investors.

Recently, MGP raised its quarterly dividend 0.5% from the previous quarter to $0.47. This marks the ninth consecutive quarter of dividend hikes. Since the initial public offering in 2016, MGP has raised its dividend by nearly 32%.

Even with these hikes, the firm has enough cash to increase its portfolio holdings.

Because of its association with MGM Resorts, the company estimates it will add more income-producing, high-value properties across North America in the future. Since the IPO, MGP has added new assets worth $4.7 billion.

For investors who are looking to strong cash flow to rescue them from low interest rates, MGM Growth Properties fits the bill.

The specialty gaming REIT offers a current yield of 6.23%, far above bonds and cash. MGP should see even stronger cash inflows in the future, as institutions see the benefit in real estate.

MGP's earnings per share and the demand for its shares are both climbing.

Finally, the 4.3 VQScore indicates it will be seeing a big increase in share price soon. The stock is our equivalent of a "Strong Buy."

Its strong financial underpinnings indicate a potential upside of $40 per share. That's a 27.6% climb from today's price of $31.36.

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