Is This 11.1%-Yielding REIT A Buy Right Now?

This REIT's shares were kicked to the curb in March when the company issued its 2018 FFO guidance. The company's dividend yield has spiked to ~11 percent, suggesting that the market is increasingly concerned about the REIT's dividend sustainability. However, the REIT has not slashed its dividend before, and the REIT continues to cover its dividend with cash flow. An investment in it is only suitable for investors with a very high risk tolerance. Investors that rely on safe dividend income should give this one a pass for now.

Whitestone REIT's (WSR) shares plunged after the company released a soft FFO guidance for 2018 and missed FFO estimates for the fourth quarter. As a result, Whitestone REIT's dividend yield has spiked, reflecting increasing investor concerns that the dividend might be at risk. What should income investors do now? A company that reports lower funds from operations or that guides for a decline in FFO puts shareholders in a tricky situation. When a company guides for lower FFO and/or misses FFO estimates, it typically triggers a sell-off in the stock. And this is exactly what happened with Whitestone REIT in March.

Source: Seeking Alpha

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