The FTSE’s crammed with a whole bunch of dividend-paying enterprises. And even in 2025, with the FTSE 100 hitting new all-time highs, there stay loads of high-yield alternatives for earnings buyers to capitalise on. Grocery store Earnings REIT‘s (LSE:SUPR) a prime example of this, with a shareholder payout sitting at a whopping 7.4% this month. And as a cherry on top, the stock’s additionally buying and selling at a near-10% low cost to its web asset worth.

The retailer’s landlord

Because the agency’s title suggests, Grocery store Earnings REIT owns and leases a portfolio of 82 properties utilized by Britain’s and France’s largest supermarkets. Its checklist of tenants contains Tesco, Sainsbury’s, Waitrose, Morrisons, Asda, Marks & Spencer, Aldi, and Carrefour. However it’s Tesco and Sainsbury’s that make up the majority of the group’s rental earnings, at 43.5% and 30% respectively.

Investing on this form of property has confirmed to be fairly a profitable area of interest. Giant retailers have a tendency to stay round for a very long time. As such, the weighted common lease length is round 12 years, offering ample long-term visibility into Grocery store Earnings REIT’s money circulation.

This enterprise mannequin makes administration life simpler when it comes to capital allocation. However it additionally makes the dividend extra dependable and predictable. So it’s hardly a shock that shareholder payouts have elevated yearly since they have been launched in 2018 – even through the pandemic. And if the consensus forecasts from analysts show correct, this upward trajectory for payouts is on monitor to proceed.

For sure, this feels like a promising place to park some capital. Much more so, given the analyst workforce at Goldman Sachs has positioned a 92p share price goal on the inventory, opening the door to some welcome capital good points. So what’s the catch?

Each funding carries threat

Whereas Goldman Sachs is among the many extra optimistic institutional followers, even it’s recognized some key dangers value cautious consideration. I’ve already touched on the truth that over 70% of rental earnings originates from simply two clients. This dependency isn’t prone to have gone unnoticed by the monetary groups and Tesco and Sainsbury’s, granting them a good bit of leverage relating to negotiating lease renewals.

On the macroeconomic entrance, there’s rate of interest threat to think about as properly. Like many REITs, Grocery store Earnings has relied closely on low cost financing over time. However now that rates of interest have shot up, the price of having a leverage stability sheet has additionally jumped, placing strain on margins.

Having mentioned that, the corporate doesn’t seem like over-leveraged proper now. And contemplating the excessive yield paired with a sturdy enterprise mannequin, this FTSE inventory could possibly be a profitable alternative for earnings buyers, making it worthy of nearer inspection, for my part.