I am on a mission to build my passive income streams to the point where they can cover my recurring expenses. That would give me much more financial freedom. I would no longer feel the pressure to work to pay the bills.
I to make making progress towards my goal each month by making investments that passive income. High Quality, high yield dividend stocks are one of my go-to options. This August I plan to buy more shares of several top dividend stocks including Apartment communities in the middle of America (NYSE: MAA) And Rexford Industrial Real Estate (NYSE: REXR).
122 and counting
Mid-America Apartment Communities, or MAA, is a real estate investment trust (REIT) focused on multifamily properties. The company currently owns nearly 104,000 apartments in 16 states, primarily in the Sun Belt region.
The company focuses on markets where job and population growth is above average, which drives demand for housing. That allows the REIT to generate steadily rising rental income to support its dividend, which currently yields about 4%. That’s much higher than the S&P 500‘S Dividend yield of 1.3%.
The apartment owner has an excellent dividend yield. It recently paid its 122nd consecutive quarterly dividend. It has increased its payout for 14 years in a row, including 5% at the end of 2023.
MAA is in a solid position to continue growing its dividend. It has a fairly conservative dividend payout ratio for a REIT (around 75% of its adjusted funds from operations [FFO] in 2024). That gives it a solid buffer and allows it to retain cash to invest in expanding its apartment portfolio. The REIT also has a very strong balance with a low 3.7 times leverage ratiowhich creates more flexibility to finance new investments.
The REIT recently acquired a newly built 306-unit mixed-use community for $81 million that is currently in the lease-up phase. Meanwhile, the company is investing more than $866 million in seven development projects to add more than 2,600 new apartments by 2026. The company also plans to launch four to six additional development projects over the next two years. Combined with rising rental income from existing properties, these new additions will help grow cash flow, which should give the company the money to continue increasing its dividend.
Focus is paying dividends
Rexford Industrial is a REIT focused on logistics properties. It owns 422 properties with approximately 49.7 million rentable square feet in one market: Southern California. That is the fourth largest market for industrial real estate in the world and consistently has the highest demand with the lowest supply. This ensures that the occupancy rate remains high, which results in strong rental growth.
Demand for industrial space has skyrocketed in recent years, fueling robust earnings growth for Rexford. Core FFO rose 11.1% to $0.60 per share in the second quarter, driven by a massive 67.7% increase in rents on new and renewed leases. in the periodThat easily supported the REIT’s quarterly dividend of $0.4175 per share (current yield is over 3%).
Rexford is using its retained cash after paying dividends and a low-leverage balance sheet to further expand its portfolio. It spent $1 billion to buy a portfolio of 48 properties from a leading private equity fund manager Black stone earlier this year. With more purchases in the second quarter, the REIT has completed $1.3 billion in acquisitions this year.
The growth of the existing portfolio and new additions place Rexford Industrial in a strong position to continue to grow its high-yielding dividend. The REIT has increased its payout by an impressive 18% compound annual rate over the past five years. It expects built-in rental growth engines, recently secured acquisitions and redevelopment projects to boost its net operating income by 35% over the next three years. That gives it a clear path to continue to grow its dividend at a strong rate.
High yielding and steadily increasing income streams
MAA and Rexford Industrial fit my passive income goals. The REITs pay high yielding dividends, supported by growing rental income and strong financial profiles. They also have visible growth prospects, which suggests they should have no trouble increasing their dividends. Therefore, they could provide me with a growing stream of dividend income. That promise of ever-increasing income is why I can’t wait to buy more shares of these REITs in August.
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Matt DiLallo has positions in Blackstone, Mid-America Apartment Communities, and Rexford Industrial Realty. The Motley Fool has positions in and recommends Blackstone, Mid-America Apartment Communities, and Rexford Industrial Realty. The Motley Fool has a disclosure policy.
Why I Can’t Wait to Buy Even More of These 2 High-Yielding Dividend Stocks in August was originally published by The Motley Fool
