REITs (real estate investment trusts) are investment vehicles that invest in real estate and/or mortgages. The investments produce real estate income and/or interest, 90% of which must be paid out as dividends to shareholders. That allows the REIT to not have to pay taxes.

REITs produce funds from operations (FFO), which is different from GAAP net income in two major respects. The two major differences are (1) adding back both depreciation and amortization expenses, and (2) adding back certain compensation expenses as well.

In other words, FFO is somewhat like EBITDA (earnings before interest, taxes depreciation, and amortization). However, interest expenses, which are added back to EBITDA along with taxes, are not added back into FFO and there are no taxes. It is a form of cash flow, although not as clean as free cash flow, which also includes working capital movements and deducts capital spending.

Nevertheless, FFO allows investors to understand how well the company can afford to cover its dividend from a cash flow standpoint. This is helpful to REIT investors, as it helps them feel more secure about its dividend payments.

Let’s dive in and look at these REITs.

Global Self Storage (SELF)

Dividend Yield: 4.2%

Global Self Storage (NASDAQ:SELF) is a self-storage company. This stock yields 4.2%, which means its 26 cents dividend is 4.2% of its $5.94 stock price as of June 13. The dividend is well covered by the company’s earnings for both 2022 and 2023.

For example, the company reported on May 16 that its adjusted FFO for Q1 was 9 cents. That works out to 36 cents annually and this more than covers the 26 cents dividend payment.

Moreover, analysts forecast that its 2023 FFO would be 38 cents per share. That will more than cover the company’s dividends. It turns out that self-storage facilities, which it leased to operators, were very profitable.

This makes this stock one of the more attractive REITs.

Store Capital (STOR)

Dividend Yield: 5.8%

Store Capital (NYSE:STOR), which stands for single-tenant operational real estate, is a large $7 billion market capitalization REIT. It has a well-diversified portfolio of over 2,500 properties.

The company produced an adjusted FFO, or AFFO of 57 cents per share. That is significantly higher than its 38.5 cents quarterly dividend, which works out to an annual dividend rate of $1.54 per share.

Analysts forecast that its FFO for 2022 will be $2.17 per share, well more than that $1.54 in dividends for the year. The following year, analysts forecast that AFFO will be $2.24 per share. The company is also protected from inflation issues, as its leases have escalation clauses based on the CPI.

This makes STOR Capital one of the best REIT stocks to consider investing in.

Realty Income (O)

Dividend Yield: 4.5%

Realty Income (NYSE:O) is a $38 billion market cap REIT that has a dividend yield of 4.5%. This is based on its $2.96 annual dividend and the price as of June 13 of $63.41.

Realty Income is forecast to produce $4 in AFFO per share for the year ending 2022. It is also seen as growing modestly at a 3.3% rate to $4.13 by the end of 2o23. This shows that the company is able to produce more than enough to pay the $2.96 annual dividend going forward.

This makes its 4.5% dividend yield fairly secure. For example, this leaves plenty of room — over $1.04 in AFFO for 2022 — over and above the $2.96 dividend, just in case a recession lowers analysts’ AFFO projections.

That makes this stock one of the best REITs on this list.

Life Storage (LSI)

Dividend Yield: 3.7%

Life Storage (NYSE:LSI) has a large portfolio of storage facilities that it leases out to storage operators, and it earns plenty of AFFO to cover its 3.7% dividend yield.

For example, the company is now forecast to make $6.14 in 2022, which more than covers the $4 annual dividend payment this year. Next year, analysts forecast that the company will make 8% more, at $6.63 per share.

At $104.44 per share on June 13, this puts the stock on a reasonable forward multiple of just 15.8x times projected AFFO. That is reasonably cheap for a company with this high level of earnings, growth and dividends.

Highwoods Properties (HIW)

Dividend Yield: 5.5%

Highwoods Properties (NYSE:HIW) rents out commercial properties in the Southeastern and Mid-Atlantic regions of the U.S. The stock has a large market cap of $3.7 billion and produces a dividend yield of 5.5% with its $2 dividend at the June 13 price of $34.56 per share.

Given that its AFFO earnings are set to reach $4 by 2023, this puts the stock on a forward multiple of just 8.6 times. That makes the stock very cheap and it also shows us that the company can more than cover its $2 dividend payments.

So given its yield and low payout ratio plus its low multiple, this makes HIW one of the better REITs to consider.

W.P. Carey (WPC)

Dividend Yield: 5.1%

W.P. Carey (NYSE:WPC) is a  diversified $16 billion REIT that produces enough AFFO to cover its ample $4.23 dividend payment. At $80.84 per share as of June 13, the stock has a dividend yield of 5.1%.

This dividend is more than covered by the company’s AFFO cash flow estimate of $5.15 for 2022 and $5.19 forecast for 2023. As a result, the stock is on a multiple of 16x for 2023. That is very reasonable, but not cheap, for a stock that yields so much and still covers its dividend payment by 122% for 2022.

This makes it one of the statistically cheap REITs worth investing in going forward.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.