Investing in high-yielding dividend stocks can be a good way to generate passive income. Although the average dividend yield today is relatively low (the S&P500Because the 1.4% yield isn’t far above the historic low of 1.1%, many companies are offering much higher dividend yields.
For example the real estate investment trust (REIT) sector is ripe for it high-yielding dividend stocks. Real estate income (NYSE:O), Prologis (NYSE: PLD)And Camden Property Trust (NYSE: CPT) stand out as three of the best options for income-seeking investors. Their larger payouts allow investors to generate more income from every dollar they invest, maximizing their income production.
Built to generate income
Realty Income certainly lives up to its name. The diversified REIT has made 646 consecutive payments monthly dividends throughout the company’s history. Since listing in 1994, it has increased its payout 124 times, increasing its dividend by 4.3% annually.
The REIT currently offers a dividend yield of almost 6%. To put that into perspective, an investor can generate approximately $6 in annual dividend income for every $100 invested in their stock. That compares to about $1.40 in annual dividend income from a comparable investment in an S&P 500 index fund.
That already higher payout should remain higher in the future. Realty Income expects adjusted growth resources from operations (FFO) in the long term by 4% to 5% per share, driven by rental growth and new income-generating real estate investments.
The company has a long growth trajectory, which it routinely extends by adding new growth sectors. Over the past year, it has added data centers, gaming properties and additional European countries to its portfolio, opening the doors to $6.6 trillion in potential new investment opportunities.
A dividend growth juggernaut
Prologis currently offers a dividend of about 3.3%, more than double that of the S&P 500. industrial REIT stands out for its ability to grow its payout above average. Over the past five years, Prologis has grown its dividend at a compound annual rate of 12%. That’s twice as fast as the S&P 500 and REIT sector averages.
And the industrial REIT should be able to continue delivering above-average dividend growth. Rental growth is a major driver. Demand for warehouses remains robust, driving high occupancy rates and market rent growth. That drives Prologis’ vision that same-store net operating income will grow 7.5% to 8.5% annually through at least 2026.
Prologis has several other organic growth drivers, including development projects, energy investments and its strategic capital platform. These internal growth engines reinforce the vision that it can grow its core FFO per share by 9% to 11% annually through 2026. Meanwhile, the company has a strong balance sheet, giving it the financial flexibility to make valuable acquisitions as opportunities arise.
Focused on growth markets
Camden Property Trust currently yields 4.3% and has a solid track record of increasing its dividend. While the residential REIT hasn’t increased its payout every year, it has grown by about a third since 2018.
The apartment owner has several motivations that should make it possible to continue increasing his dividend. It focuses on owning rental communities in markets where population and employment growth are above average. This ensures higher occupancy rates and rental growth.
Camden’s focus on growth markets also provides new expansion opportunities. It is currently investing nearly $550 million in five development projects, including its first two single-family rental properties. Meanwhile, the company has nine more communities in its development pipeline, representing nearly $1.4 billion in future investment opportunities.
In addition, the company routinely invests in value-added projects to enhance its existing portfolio by renovating units, adding amenities and making other investments to improve occupancy, retention and rental income. Finally, the company has a strong balance sheet, giving it the financial flexibility to opportunistically acquire operating communities and land to support future developments.
These higher yields should continue to rise
Realty Income, Prologis and Camden Property Trust offer investors higher-yielding dividends. This allows them to maximize the income from their investments. Additionally, all three REITs have excellent track records when it comes to increasing their dividends, which is likely to continue. These characteristics make them great high-yield dividend stocks to buy now.
Should you invest €1,000 in real estate income now?
Consider the following before purchasing shares in Realty Income:
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Matt DiLallo has positions in Camden Property Trust, Prologis and Realty Income. The Motley Fool holds positions in and recommends Camden Property Trust, Prologis and Realty Income. The Motley Fool recommends the following options: Long $90 January 2026 calls on Prologis. The Motley Fool has a disclosure policy.
3 No-Brainer High-Yield Dividend Stocks to Buy Now for Under $1,000 was originally published by The Motley Fool
