The benchmark S&P500 The index continues to reach new highs, but not all components have participated in the rally. Royalty Pharma(NASDAQ: RPRX), W. P. Carey(NYSE:WPC)And Omega healthcare investors(NYSE:OHI) are three dividend payers with share prices that have fallen recently.
At their low prices, these stocks offer juicy dividend yields, and there’s a good chance they can maintain or increase their payouts for at least a decade. This is why adding these stocks to a diverse portfolio seems like a smart move right now.
Shares of Royalty Pharma are down about 20% from the peak they reached this spring. However, the quarterly dividend payment has increased by 40% since 2020. At recent prices, the stock offers an unusually high dividend yield of 3.3% that could continue to rise throughout your retirement.
Royalty Pharma is a specialist financier for the biopharmaceutical industry and there is no shortage of demand for capital. Generally, it invests just before or after new drugs are approved. Instead of betting on companies, the company invests in the drugs themselves and its track record is remarkable.
Royalty Pharma has invested in more than 80 assets since its founding in 1996. Currently, 15 of them generate annual revenues of more than $1 billion.
Investors can look forward to continued growth in Royalty Pharma’s operating income and dividend payments. The company recently acquired a 13.8% royalty on U.S. sales of Niktimvo, a recently approved treatment for graft versus host disease (GvHD) from Syndax pharmaceutical products.
Syndax and Incyte will commercialize Niktimvo in the US, where Incyte’s Jakafi is already a top-selling GvHD therapy. With Incyte’s help, Niktimvo’s sales are expected to exceed $1 billion annually, and Royalty Pharma could receive royalties on the drug through 2038.
WP Carey shares have been under pressure since the company spun off its office portfolio in 2023. The Real Estate Investment Trust (REIT) reduced its dividend payout last year to take into account the lack of office buildings. Fortunately, the well-managed REIT has been able to increase its payout every quarter since the spinoff.
WP Carey stock offers investors a juicy dividend yield of 6.3% at recent prices. The company rents its enormous portfolio of 1,430 properties to approximately 346 tenants. Investors can look forward to steady profits from this REIT, as none of these tenants are responsible for an outsized portion of its total revenue.
At the end of September, Extra space storage was the REIT’s largest tenant. It is America’s largest operator of self-storage facilities, but accounts for just 2.7% of WP Carey’s annual base rent. The REIT’s top 10 tenants together account for just 20.2% of annualized base rent.
In addition to a diverse tenant roster, WP Carey boasts geographic diversification, with less than three-fifths of annual base rent coming from the United States. The REIT is even prepared to overcome another round of inflation, with the majority of leases tied to consumer price indexes.
Omega Healthcare Investors is a net lease REIT in the nursing home niche. The stock has maintained its dividend payment since 2019. Unfortunately for its long-term shareholders, the stock is down about 13.6% from its pre-pandemic peak.
At the low price, the nursing home REIT offers investors an eye-popping 6.9% dividend yield. It might not be the fastest growing dividend payout in your portfolio. However, as the largest REIT in the nursing home niche, it’s one of the more reliable payouts you’ll receive during your retirement years.
Omega Healthcare Investors was under some pressure because one of its tenants, LaVie, filed for bankruptcy in June with nearly $1.2 billion in debt. Omega leans on LaVie for rental payments that total about $3 million per month, or just under 4% of total rental income.
As a net lease REIT, Omega Healthcare doesn’t need its operators to succeed; it just needs them to pay rent. Despite the bankruptcy, LaVie has kept up with rent payments.
This year, management expects adjusted funds from operations, a measure of earnings, to reach $2.85 per share, at the midpoint of management’s stated range. That’s enough to maintain a dividend payment currently set at $2.68 per year.
A dividend increase doesn’t seem likely in the near term, but investors can reasonably expect some payout bumps. In the first ten months of the year, the REIT invested approximately $834 million in new sources of rental income. Adding a few stocks to a diverse portfolio now can lead to a lot of passive income once you’re ready to retire.
Before you buy shares in Royalty Pharma Plc, you should consider the following:
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Incyte. The Motley Fool recommends additional storage space. The Motley Fool has a disclosure policy.
3 High-Yield Dividend Stocks to Buy in 2025 and Hold for 10 Years or More Originally published by The Motley Fool
