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Hundreds of companies pay dividends, presenting numerous opportunities for those seeking a steadily increasing income stream. Real estate investment trusts (REITs) are particularly compelling dividend stock choices.
The negative consequences of increasing interest rates on real estate values have put REITs under great strain lately. This has resulted in reduced stock prices and increased dividend yields, allowing investors to earn more income today from their assets.
Notable REITs currently recommended for investment include Agree Realty (NYSE:ADC), Extra Space Storage (NYSE:EXR), and Rexford Industrial Realty (NYSE:REXR). These stocks provide an opportunity to turn a $250 investment into a superior and growing income stream.
Agree Realty
Agree Realty (NYSE:ADC) is a net lease REIT focusing on free-standing assets net leased or ground leased to premium shops. Usually impervious to financial crises and the challenges posed by e-commerce, these tenants represent continuous rental income, supported by Agree Realty’s lease agreements.
Agree Realty’s dividend yield is almost 5% since rising interest rates have led to a decline in its share price. At this yield, a $250 investment in Agree Realty would produce approximately $12 in annual dividend income; by contrast, a $250 investment in an S&P 500 index fund would yield just over $3.
The income stream is expected to rise steadily. Over the last 10 years, the REIT increased its dividend at a compound annual rate of 5.6%. The acquisition of additional income-generating retail stores is mostly responsible for this rise. Agree Realty plans to purchase buildings worth $600 million this year, augmenting its adjusted funds from operations (FFO) by about 4%.
Future purchases provide significant opportunities. Agree Realty has a considerable runway for development since the REIT’s retail partners own about 165,000 locations with potential sold-leaseback prospects.
Extra Space Storage
Leading self-storage REIT, Extra Space Storage, regularly produces increasing income from consumer and business rentals of its self-storage facilities. High demand has kept occupancy rates high, allowing the REIT to routinely raise rental rates.
Extra Space Storage’s dividend yield is currently 4.5%, partially due to a more than 25% decline in its share price caused by the high impact of increasing interest rates. The REIT has remarkably increased its payment by around 245% within the last decade.
Looking ahead, Extra Space Storage has a great chance to continue raising its dividend. The fragmented self-storage sector presents plenty of opportunities for the REIT to grow its owned portfolio and industry-leading third-party management system.
Rexford Industrial Realty
Concentrated on the Southern California area, Rexford Industrial Realty is an industrial REIT with warehousing and distribution facilities rented to tenants in several industries.
Because of Southern California’s limited supply and strong demand, this deliberate concentration on the area has produced notable advantages in sustaining high occupancy rates and allowing for large rent increases.
Due in part to a more than 45% drop in its stock price from its high a few years ago, spurred by increasing interest rates, the REIT today provides a dividend of over 3.5%. Rexford has raised its dividend payout over the past five years at an average yearly rate of 18%.
Rexford is positioned to continue to increase its dividend. In addition to assisting with rent hikes, the REIT boasts a good history of accretive acquisitions. This year alone, Rexford has acquired about $1.4 billion, projected to increase its income stream.
Over the next three years, the REIT forecasts that these acquisitions and internal development drivers will continue generating an increase in its net operating income by 47%. Rexford also maintains great financial flexibility to facilitate continuous expansion through additional accretive acquisitions.
Looking For Higher-Yield Opportunities?
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For example, the Jeff Bezos-backed investment platform just launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100.
Don’t miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga’s favorite high-yield offerings.
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This article 3 Dividend Stocks To Consider For A $250 Investment originally appeared on Benzinga.com