3 High-Yield REITs for Sustainable Passive Income in a Low-Yield Market

In a world where traditional fixed-income assets offer meager returns, income-focused investors are turning to alternative sources of cash flow. Real Estate Investment Trusts (REITs) remain a cornerstone of this strategy, particularly those with a proven ability to balance high yields with financial discipline and sector resilience. This article identifies three REITs that stand out in 2025 for their combination of robust dividend sustainability, conservative balance sheets, and exposure to industries poised for long-term stability.

1. Healthpeak Properties (PEAK): Healthcare Real Estate as a Hedge Against Uncertainty

Healthpeak Properties (PEAK) has redefined its identity as a healthcare REIT, shifting from senior housing to life science and medical office buildings (MOBs) after its 2024 merger with Physicians Realty. This strategic pivot positions the company to capitalize on two critical trends: the aging population and the rise of outpatient care.

Financial Discipline
PEAK maintains a BBB+ credit rating and a debt-to-EBITDA ratio of 6.2x, well within conservative thresholds for the sector. Its focus on triple-net leases—where tenants cover property taxes, insurance, and maintenance—reduces operational risk and ensures predictable cash flows.

Dividend Sustainability
With a payout ratio of 75% and a history of annual dividend growth since 2011, PEAK's 6.8% yield is underpinned by strong tenant coverage. Its top 10 tenants, including biotech firms and hospital systems, collectively account for 30% of revenue, with lease expirations staggered to minimize concentration risk.

Sector Resilience
Medical office buildings and life science facilities are mission-critical assets. Tenants like pharmaceutical companies and research institutions operate in industries supported by both private and public funding, ensuring demand even during economic downturns.

2. Realty Income (O): The Dividend King of Retail Real Estate

Realty Income (O) has paid monthly dividends for 56 years without interruption, a testament to its disciplined approach to tenant selection and geographic diversification. Known as “The Monthly Dividend Company,” O owns over 15,000 single-tenant retail properties, many leased to non-discretionary retailers such as pharmacies, grocery stores, and auto repair services.

Financial Discipline
O's leverage is conservative, with a debt-to-EBITDA of 5.8x and an A- credit rating. Its focus on long-term, inflation-protected leases (average term of 14 years) provides stability, while its diversified tenant base—spanning 125 industries—reduces exposure to sector-specific downturns.

Dividend Sustainability
The REIT's 4.1% yield is supported by a payout ratio of 68% and a 35-year history of annual dividend increases. Its recent focus on non-essential retail tenants like Dollar General and Best Buy has offset e-commerce pressures, ensuring steady rent collections.

Sector Resilience
Non-discretionary retail tenants serve essential needs, making their operations less sensitive to economic cycles. O's properties, often located in high-traffic areas, further insulate it from competition.

3. Agree Realty (ADC): Conservative Retail with a Focus on Blue-Chip Tenants

Agree Realty (ADC) owns 2,000 free-standing retail properties, 90% of which are leased to investment-grade tenants like Walmart, CVS, and Dollar General. Its focus on essential retail—grocery, home improvement, and convenience stores—positions it to thrive in a post-pandemic landscape where e-commerce has limited impact.

Financial Discipline
ADC's leverage is among the lowest in the sector, with a debt-to-EBITDA of 5.1x and a BBB+ credit rating. It also maintains a 100% coverage ratio for its dividend, ensuring ample cushion during downturns.

Dividend Sustainability
The REIT's 4.3% yield is backed by a 15-year streak of annual dividend growth and a payout ratio of 65%. Its tenant retention rate of 95% over the past decade underscores its ability to generate recurring revenue.

Sector Resilience
Agree's portfolio is concentrated in essential retail, which accounts for 80% of U.S. retail spending. Its properties are also located in secondary markets, where demand for physical retail remains strong due to lower online penetration.

Conclusion: Balancing Yield and Risk in a Challenging Environment

For income investors, the key to long-term success lies in selecting REITs that prioritize financial discipline and sector resilience. Healthpeak Properties, Realty Income, and Agree Realty exemplify this approach, offering yields above 4% while maintaining conservative leverage and diversified tenant bases.

However, not all high-yield REITs are created equal. REITs like LTC Properties and EPR Properties, while attractive on paper, expose investors to volatile sectors like senior housing and discretionary retail. Investors seeking sustainable passive income should prioritize REITs with long dividend histories, strong credit ratings, and exposure to industries that thrive regardless of macroeconomic conditions.

In a low-yield market, these three REITs provide a roadmap to building a resilient income portfolio—one that generates cash flow without sacrificing safety.