While benchmark indices such as the S&P500 have reached record highs, there are some excellent opportunities to add income to your portfolio. Due to the high interest rate environment, many top dividend stocks are trading well below their highs, despite strong performance from the companies themselves. Here are three in particular that look appealing as we head into the summer months.
A different kind of casino stock
Vici properties (NYSE:VICI) split from Caesars Entertainment (NASDAQ: CZR) about seven years ago to spin off some of the latter’s real estate holdings and has already built an impressive track record. In the years since it went public, Vici acquired its biggest rival, one of the most impressive properties on the Las Vegas Strip, and began expanding into other types of real estate.
On the gaming side, Vici is the largest owner of gaming real estate in Las Vegas, with properties such as Caesars Palace, Mandalay Bay, MGM Grand, The Venetian and several others. It also owns an impressive collection of regional gaming real estate, including properties like The Borgata in Atlantic City and MGM National Harbor in DC. And management is starting to branch out into other opportunities, such as acquiring a portfolio of Bowlero entertainment centers and providing various construction loans to property developers.
In short, Vici’s results to date are impressive and there is a huge experiential real estate market it could pursue. The stock pays a 5.6% dividend yield that is well covered by cash flow, and management has increased the payout every year since it went public.
Slow and steady wins the race
Real estate income (NYSE:O) may not sound like the most exciting undertaking. It owns a portfolio of more than 15,000 single-tenant properties, mainly in the retail and service sectors, and its tenants sign long-term leases.
And to be honest, the company itself is somewhat boring. I’ve been an investor in Realty Income for more than a decade and I can’t recall a single time when the company’s earnings results surprised the market. But that’s a good thing. This is a company set up as a compounder for the long term.
Most Realty Income tenants are in recession-resistant and e-commerce-resistant sectors. They sign leases with an initial term of ten years or longer, with annual rent increases built in, and they agree to cover the variable costs of property ownership, such as taxes and insurance.
The proof is in the numbers. Not only does Realty Income have a 5.8% dividend yield, but it has also increased its payout for 107 consecutive quarters. It’s not just a matter of revenue, as smart capital allocation has allowed the company to deliver an annualized total return of 13.6% since its IPO in 1994, handily beating the S&P 500.
Take the guesswork out
This is not an individual stock at all. If you’re looking for reliable dividend income for years to come, the Vanguard ETF with high dividend yield (NYSEMKT: VYM) could suit you very well.
This ETF tracks an index of approximately 550 companies whose shares have historically paid above-average dividends. With an average market capitalization of $126 billion, it focuses on larger (mature) companies, and to give you an idea of what you’re investing in, the fund’s top holdings include: Broadcom, JPMorgan Chase, ExxonMobilAnd Procter & Gamble.
The ETF has a dividend yield of around 2.8% at the time of writing, and it is likely that the dividend income it produces will increase over time. If you don’t want too much exposure to one stock, this can be an excellent way to generate dividend income without worry.
The bottom line is that all three are ways to add reliable dividend income to your portfolio. All three investments discussed here can be quite volatile over shorter periods of time, but the income they produce should be very reliable.
Should you invest $1,000 in Vici Properties now?
Please consider the following before purchasing shares in Vici Properties:
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Matt Frankel has positions in Realty Income and Vici Properties. The Motley Fool holds positions in and recommends JPMorgan Chase, Realty Income, Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF, and Vici Properties. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Do you want passive income for decades? 3 Stocks to Buy Now and Hold Forever was originally published by The Motley Fool
