Real estate investment trusts, or REITs, have been suffering due to COVID-19. However, REITs could offer benefits to a retirement portfolio such as a stable source of dividend income and can protect against inflation. Several REITs could provide a stable income in your retirement portfolio since they pay monthly dividends.
In the US, there are 150+ REITs listed that have dividend yields of up to 18%. High yield examples are Geo Group (GEO) and Orchid Island Capital (ORC). However, we prefer to focus on REITs with a proven track record of yearly increasing dividends.
As a starting point, here are the REITs that have a track record of at least 10 years of consecutive dividend increases.
This article focuses on three different REITs from this list and provides insights on the main differences. 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: $41.40 (04/16/2021)
52-week range: $30.03 – $41.55
YTD % change: 14.13%
Distribution yield: 3.08%
Expense ratio: 0.12%
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 over 600 consecutive monthly dividend payments throughout its 51-year history and has increased its dividend 108 times since its IPO. It reached the dividend aristocrat status in 2020. Realty Income has a strong tenant portfolio that 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. The dividend frequency is monthly and in March 2021 Realty Income declared $0.235 per share monthly dividend, 0.2% increase from the prior dividend of $0.2345.
Current price: $67.02 (04/16/2021)
52-week range: $47.68 – $67.38
YTD % change: 9.05%
Dividend yield: 4.21%
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. The dividend frequency is quarterly.
Current price: $289.49 (04/16/2021)
52-week range: $186.30 – $294.79
YTD % change: 22.85%
Dividend yield: 2.89%
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). Like Realty Income, the dividend frequency is monthly.
Current price: $35.56 (04/16/2021)
52-week range: $22.18 – $35.88
YTD % change: 14.83%
Dividend yield: 4.08%
Over the past 5 years, STAG Industrial was the only REIT that outperformed S&P 500 Real Estate Select Sector Index ETF (XLRE).
The US REIT investment options are unmatched compared to Europe. Especially the consecutive dividend increases or monthly dividend pay-outs are very rare. We would like to highlight one real-estate ETF that stands out in the European context based on past performances. This is the Janus Henderson Horizon Pan European Property ETF (LU0892274969). Detailed information can be found on morningstar.
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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