Dividends and Dollars: A Deep Dive into CTO Realty Growth

If you’re aiming to build a reliable source of passive income, high-yield dividend stocks remain an attractive option. By investing in financially stable companies with consistent dividend payouts, you can enjoy regular income along with the potential for decent long-term capital appreciation. Among the leading high-yield dividend stocks, CTO Realty Growth (CTO) stands out for its impressive yield of 8.6% and sustainable payouts, making it a compelling choice for income-focused investors.

Understanding CTO Realty Growth

CTO Realty Growth is a real estate investment trust (REIT) that specializes in owning and managing high-quality retail properties across some of the fastest-growing markets in the U.S. The company focuses on building community hubs that generate solid tenant demand. Its portfolio is strategically built around multi-tenant spaces anchored by essential businesses such as grocery stores, lifestyle retailers, and service providers. This diverse tenant mix ensures consistent foot traffic, which is crucial for stable cash flow, especially in uncertain economic conditions.

Strategic Growth and Value Enhancement

CTO Realty Growth employs a proactive strategy to enhance its portfolio’s value. The REIT focuses on acquiring high-potential properties and increasing their value through various means, including:

Leasing Vacant Space: Filling empty units to generate immediate income.
Raising Below-Market Rents: Adjusting rents to align with market rates.
Redeveloping Key Assets: Upgrading properties to attract better tenants and higher rents.

This multifaceted approach not only boosts immediate income but also builds long-term value across its portfolio.

Operational Performance and Leasing Activity

The operational performance of CTO Realty Growth has been robust, as evidenced by strong leasing activity. In the first quarter of 2025, the REIT signed over 112,000 square feet of new leases, renewals, and extensions at an average rent of $24.14 per square foot—about 25% above its existing portfolio average. This highlights the strong demand for CTO’s properties and its ability to drive rental income higher over time.

As of the latest quarter, CTO’s portfolio was 93.8% leased and 91% occupied. The REIT has a pipeline of signed leases not yet generating rent, equating to about $4 million in annual base rent, roughly 4% of current cash rents. These leases are expected to start contributing in the latter half of 2025, further strengthening its performance.

Development Plans and Future Growth

CTO Realty Growth’s development plans remain solid, with ongoing lease negotiations for its 10 acres of undeveloped land. As these sites and other leasing deals come online in the second half of 2025, they are expected to serve as a strong growth engine into 2026. Despite ongoing macroeconomic headwinds like trade tariffs, CTO appears well-insulated due to its focus on high-growth markets, diverse tenant base, and strategically located properties.

Recent Acquisitions and Strategic Moves

A notable acquisition in the past quarter was Ashley Park, a 559,000-square-foot open-air lifestyle center in the Newnan submarket of Atlanta, acquired for $79.8 million. This center presents multiple upsides, including significant leasing potential, under-market rents, and a purchase price far below replacement cost. The acquisition not only brings immediate scale but also future income growth.

CTO has also been proactive in re-leasing anchor spaces vacated by bankrupt tenants at the end of 2024 and early 2025. The REIT has already re-leased two vacant anchor spaces and is close to finalizing deals on two more. Management remains optimistic about achieving a 40% to 60% positive cash leasing spread from these re-leases, which would provide a meaningful boost to income.

Conclusion: A Strong Buy for Income Investors

In summary, CTO Realty Growth’s focus on high-quality tenants, properties in high-growth markets, strong occupancy rates, and a solid pipeline of lease commencements positions it well for steady growth. Wall Street analysts recommend a “Strong Buy” consensus rating on CTO Realty stock amid macro uncertainty. Furthermore, with a quarterly dividend of $0.38 per share, reflecting an attractive yield of 8.6%, CTO Realty Growth stands out as a compelling income stock for those seeking to build a reliable source of passive income.

For investors looking to diversify their portfolios with high-yield dividend stocks, CTO Realty Growth offers a robust option backed by solid fundamentals and a strategic growth plan.

On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. This article was originally published on Barchart.com.