Matt DiLallo, The Motley Fool

Sat, May 10, 2025, 7:06 AM5 min read

• EPR Properties generates very stable rental income.

• That cash flow supports its high-yielding monthly dividend and investments to grow its portfolio.

• The REIT's growth investments enable it to increase its dividend.

• 10 stocks we like better than EPR Properties ›

Investing money in high-yielding dividend stocks can be a great way to generate passive income. Their higher yields enable investors to earn more money from every dollar they invest.

EPR Properties (NYSE: EPR) is a great option for those seeking a lucrative passive income stream. The real estate investment trust (REIT) currently has a dividend yield approaching 7%. It could turn a $5,000 investment into nearly $350 of annual passive income at that rate. Even better, the REIT pays a monthly dividend, making it appealing for those seeking regular passive income to help cover their recurring expenses. Here's a closer look at this high-yielding REIT.

EPR Properties specializes in investing in experiential real estate. It owns movie theaters, eat-and-play venues, fitness and wellness properties, attractions, and other similar properties. It leases these properties to tenants that will operate the experiences. It also has a small portfolio of educational properties (early education centers and private schools). Most of its leases are triple net (NNN), which provides very stable rental income because the tenant covers all operating costs, including routine maintenance, real estate taxes, and building insurance.

The REIT pays out a conservative percentage of its predictable rental income in dividends. In 2025, the company expects to generate between $5 and $5.16 per share of funds from operations (FFO) as adjusted, a 4.3% increase from last year at the midpoint. EPR Properties currently pays a monthly dividend of $0.295 per share ($3.54 annually). That gives it a dividend payout ratio of around 70%.

That conservative payout ratio gives the REIT a nice cushion while enabling it to retain meaningful excess free cash flow to fund new experiential property investments. EPR Properties also has a solid investment-grade balance sheet with lots of liquidity. It ended the first quarter with $20.6 million in cash and only $105 million outstanding on its $1 billion credit facility.

EPR Properties' combination of stable cash flow, conservative payout ratio, and rock-solid balance sheet puts its high-yielding dividend on a very firm foundation.

The REIT steadily invests money to enhance and expand its portfolio. It aims to spend between $200 million and $300 million this year. The company invested $37.7 million during the first quarter, including buying an attraction property in New Jersey for $14.3 million (Diggerland USA, the only construction-themed attraction and water park in the country). The rest of its investments were on build-to-suit development and redevelopment projects, including some Andretti Indoor Karting eat-and-play venues that will open over the next year.