The Fed expects to raise interest rates only twice this year.That’s half the number of rate increases it originally expected to make in 2016.The reduced number of anticipated rate hikes is largely due to the fact that there are international economic concerns which can negatively impact growth in the United States.

As interest rates stay low, there tends to be an increased preference for dividend stocks.This higher demand for companies which dole out higher yields drives share prices higher.Investors tend to favor dividend income in times of market volatility. We’ve seen plenty of this in 2016, so companies doling out higher yields could stand to experience superior returns this year.

REITs, or real estate investment trusts, give out the majority of their net income to investors in the form of dividends.If they give out 90% of their income, then these companies are exempt from paying federal income taxes. 

REITs give out superior yields compared to most companies in the market, so these companies could benefit the most from the market’s growing preference for dividend stocks.Below, we highlight three REITs with strong fundamentals who are also offering high dividend yields. 

Omega Healthcare Investors-(OHI - Snapshot Report)

Omega Healthcare is a self-administered REIT which invests in income-producing healthcare facilities.The company currently holds a Zacks Rank #2 (Buy), and doles out a dividend yield of 6.61%.  The company has current cash flow growth of 31.66%, which should help the company to sustain its dividend payout to equity investors.It’s also very liquid, with a current ratio of 2.71.

Omega has a debt/capital of 46.53%.Compared to other REIT’s, OHI is in a different league with regards to profitability, having net margins of 30.19%.Omega’s ROE is 6.41%, which is also considerably higher than the industry’s ROE of 5.21%. 

Sales are projected to grow by 15.36% this year, which makes OHI an especially interesting growth candidate, since it has a combination of high sales growth along with large profit margins.Omega’s EPS is projected to grow by 14.97% this year.

Prologis Inc-(PLD - Analyst Report)

Prologis acquires, develops, and operates industrial properties in North America, Europe, and Asia.PLD stock holds a Zacks Rank #2 (Buy), and it doles out a dividend that yields 3.95%.The company has a market cap of $23.33 billion, and it also trades at a price-to-book of just 1.22.It helps that the company has a relatively low debt-to-capital of 38.69%, which is much better than the industry’s average debt-to-capital of 47.3%.

PLD has made a lot of progress since 2013.Since then, the company has seen strong operating cash flow growth, its net income has more than doubled, and gross profits for 2014 and 2015 stayed consistently high at 75% for both years. Prologis is ridiculously profitable, with net margins of 39.57%.To put some perspective around this, the industry’s average net margin is just 13.68%.Sales and EPS are expected to grow by 7.48% and 14.35%, respectively.

Monmouth Real Estate Investment Corporation-(MNR - Snapshot Report)

Monmouth is a hybrid real estate investment trust. The company specializes in net-leased industrial properties.Monmouth is a Zacks Rank #2 (Buy), and it also experiences less volatility with a beta of just 0.44. The company is pretty small, with a market cap of just $727.8 million. With a current ratio of 8.33, MNR should be very liquid in the near term. The company has a PEG of just 2.08, which exceeds the industry’s PEG of 2.37.

Monmouth has some considerable growth metrics to back it up as a viable buy candidate. MNR has a net margin of 31.23%, and its EPS is projected to grow by 13.3% this year. Along with EPS, sales are also expected to increase significantly, with revenues projected to grow by 23.31% this year. Sales momentum is nothing new for Monmouth, as the company has seen sales grow by over 40% since 2013.

Bottom Line

Something I like to see in a REIT is its potential to grow. This is why net margins and sales growth are so important in my analysis. You see, many REITs dole out dividends which are higher than the cash balance on their balance sheets, so to give investors their dividends, many REITs issue debt. This can cause problems over the long term if these companies struggle to grow. Fortunately, the three companies above look set to be able to dole out their dividends over the long term.