Real estate investment trusts, or REITs, have been suffering due to COVID-19. Especially commercial real estate closures, as a result of the pandemic, have meant the loss of business and income for the REITs. Which had a devastating impact on REITs performance in 2020. The S&P 500 Real Estate Select Sector Index (XLRE), which seeks to provide an effective representation of the real estate sector, is down about 4% YTD, while the S&P500-index is up 16.88%. Investors are wondering whether this sector could rebound in 2021, anticipating the corona vaccines economy re-opening.
There are several REITs that have performed “relatively” well in 2020. Some of these REITs were able to maintain (or even increased) their dividends this year, while several REITs had to cut their dividends. For example, Unibail-Rodamco-Westfield, which did cut its dividend and is still down around 47% ytd.
Let’s now take a closer look at three real estate stocks, which includes monthly dividend REITs and dividend aristocrat members. The main difference is their property portfolio.
S&P 500 Real Estate Select Sector Index ETF (XLRE)
As a benchmark, we take the S&P 500 Real Estate Select Sector Index ETF (XLRE), which could be also an option for investors seeking diversification and want to invest in the Real Estate sector.
Current price: $36.44
52-week range: $24.88 – $42.00
YTD % change: -3.69%
Distribution yield: 3.01%
Expense ratio: 0.13%
Realty Income (O)
Called “The Monthly Dividend Company”, Realty Income is a favorite in the REIT sector and investors that favor dividend aristocrats. Realty Income has declared 606 consecutive monthly dividend payments throughout its 51-year history and has increased its dividend 107 times since its IPO. It reached the dividend aristocrat status in 2020. Realty Income has a strong tenant portfolio which includes industry leaders, as the top-5 tenants clearly show:
- Dollar General
- Dollar Tree / Family Dollar
This portfolio helps Realty Income to generate enough cash flow to even increase its dividend, resulting in dividend growth of 3% in the last year.
Current price(12/19/20): $59.52
52-week range: $38.00 – $84.92
YTD % change: -15.65%
Dividend yield: 4.73%
Essex Property Trust Inc. (ESS)
Essex Property Trust is a multi-family REIT focused on the U.S. West Coast. Essex’s portfolio contains mainly 245 apartment communities consisting of over 60,000 apartment homes in California and Seattle. Like Realty Income, ESS is a dividend aristocrat. The company has been able to increase its dividend for 26 consecutive years.
Current price(12/19/20): $234.37
52-week range: $175.81 – $329.74
YTD % change: -19.84%
Dividend yield: 3.55%
STAG Industrial (STAG)
STAG Industrial is not a dividend aristocrat but does pay a monthly dividend. The portfolio is focused on single-tenant industrial properties and has +450 buildings across 38 states in the United States. Approximately 40% of their portfolio handles e-commerce activity, including Amazon (2.9% of the total portfolio).
Current price(12/19/20): $30.43
52-week range: $17.54 – $34.50
YTD % change: 0.84%
Dividend yield: 4.73%
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market in the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors, there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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