Dividend stock investments play a pivotal role in my overall investment strategy. They allow me to earn passive income, which I reinvest to acquire additional dividend-paying stocks. Historically, dividend stocks have shown stronger performance than those that don’t pay dividends, delivering an average annualized return of 9.2%, compared to just 4.3% over the past five decades, based on data from Ned Davis Research and Hartford Funds.
Dividend growth stocks have yielded the most impressive returns at 10.2% annualized, which is why my focus is on companies that consistently enhance their payouts. Realty Income (NYSE: O), Mid-America Apartment Communities (NYSE: MAA), and Vici Properties (NYSE: VICI) have outstanding track records for growing their dividends. Moreover, they provide higher dividend yields, which increases my earning potential for every dollar I invest. I’m eager to expand my investments in each of them this October.
Consistent achievers
Realty Income currently boasts a very appealing dividend yield, exceeding 5%. This diversified real estate investment trust (REIT) surpasses the dividend yield of the S&P 500, which sits below 1.5%.
What distinguishes Realty Income is its remarkable ability to increase dividends. Since going public in 1994, the REIT has raised its payment 127 times, including for 108 consecutive quarters. The dividend has grown at a compound annual rate of 4.3%, leading to a remarkable annualized total return of 13.5%.
The driving force behind Realty Income’s consistent dividend growth is its acquisition strategy. The REIT estimates that each $1 billion in productive acquisitions can contribute an additional 0.5% to its adjusted funds from operations (FFO) per share annually. This year, it plans to acquire $3 billion in properties, not to mention its $9.3 billion merger with fellow REIT Spirit Realty. With trillions of dollars in commercial real estate available, Realty Income is well-positioned to keep expanding its portfolio, income, and dividend.
Strengthening dividend growth potential
Mid-America Apartment Communities currently has a dividend yield exceeding 3.5%. This apartment-focused REIT has raised its payout for 14 consecutive years, including a 5% increase late last year.
The company benefits from steadily increasing rental revenues, owning apartment communities across the Sun Belt region, where population and job growth rates are above average. This trend boosts housing demand, maintaining high occupancy levels and healthy rental growth.
MAA also gains from its investments in expanding its apartment portfolio. The REIT recently acquired a newly developed apartment community in Raleigh, North Carolina, and has seven new communities under construction expected to be completed within the next couple of years. Additionally, it plans to initiate four to six more development projects in the coming two years to further its expansion. These additions will enhance its potential to leverage increasing rents, supporting continued dividend growth.
A strategic choice
Vici Properties currently offers a dividend yield exceeding 5%. This REIT, specializing in experiential real estate such as gaming, hospitality, and entertainment properties, has consistently raised its dividends for seven consecutive years since becoming public. Recently, it boosted its payment by 4.2%, demonstrating a peer-leading 7% compound annual dividend growth rate since 2018.
The primary driver of Vici Properties’ increasing dividend is its new investment activity. The company has acquired experiential assets from operators through sale-leaseback transactions, merged with another significant gaming REIT, and is investing in various development projects.
Vici Properties’ credit investment platform provides new investment opportunities. For instance, it converted a loan with Chelsea Piers into an acquisition last year. Additionally, it has recently agreed to fund the development of a Margaritaville Resort, where the REIT received the option to purchase that property along with other sport-related assets in development. The expanding portfolio of Vici Properties should enhance its income, allowing the REIT to keep increasing its dividend.
Outstanding dividend growth stocks
Realty Income, MAA, and Vici Properties all boast high-yielding dividends with consistent growth trajectories. This trio of REITs appears poised to continue their payout increases. Consequently, I am excited to bolster my investments in October. This will enable me to earn more from the income these REITs generate while positioning my portfolio for above-average total returns in the long run.
Is it a good time to invest $1,000 in Realty Income?
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Matt DiLallo holds positions in Mid-America Apartment Communities, Realty Income, and Vici Properties. The Motley Fool has positions in and recommends Mid-America Apartment Communities and Realty Income. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.
I Can’t Wait to Buy More of These 3 Top High-Yield Dividend Stocks in October was originally published by The Motley Fool
