Want to Make $1,000 of Passive Income Each Year? Invest $22,000 into These 3 Top High-Yield Dividend Stocks.
Investing money in high-yielding dividend stocks is a super-easy way to generate passive income. You just buy the stocks and watch the dividend income flow into your account.
For example, investing $22,000 across the following three dividend stocks could net you over $1,000 of dividend income each year:
|
Dividend Stock |
Investment |
Current Yield |
Annual Dividend Income |
|---|---|---|---|
|
Federal Realty Investment Trust (FRT 0.55%) |
$7,333.33 |
4.67% |
$342.47 |
|
EPR Properties (EPR 0.72%) |
$7,333.33 |
6.05% |
$443.67 |
|
Sun Communities (SUI 0.07%) |
$7,333.33 |
3.26% |
$239.07 |
|
Total |
$22,000.00 |
4.66% |
$1,025.20 |
Data sources: Google Finance and author’s calculations.
These real estate investment trusts (REITs) all generate stable and growing rental income to support their high-yielding dividends. Here’s a closer look at these high-quality, high-yielding dividend stocks.
Image source: Getty Images.
Federal Realty Investment Trust
Federal Realty Investment Trust is a REIT focused on owning high-quality retail properties. The company has always prioritized quality over quantity when investing in retail properties. It currently owns 103 properties across nine strategically selected metro markets, primarily major gateway cities. The REIT invests in the first-ring suburbs of these markets because those areas benefit from the best demographics, given their highly dense populations of high-income earners. Space in those properties tends to remain in high demand by retailers, keeping occupancy high and driving steady rent growth.
It routinely upgrades its portfolio by selling lower-quality properties and recycling that capital to acquire higher-quality locations. Federal Realty will also invest money to improve its existing locations, including adding residential and other properties to its retail centers to draw more traffic to its retail tenants.
The REIT’s focused and high-quality real estate portfolio has produced durable and growing income. That has enabled Federal Realty Investment Trust to raise its payment for 57 straight years, the longest record in the REIT industry.
EPR Properties
EPR Properties is a REIT focused on owning experiential real estate, including movie theaters, eat-and-play venues, and attractions. It leases these properties to operating tenants, primarily under triple net (NNN) terms. NNN leases generate stable rental income because tenants cover all property operating costs, including routine maintenance, real estate taxes, and building insurance. That stable income enables EPR Properties to pay a monthly dividend.
The REIT generates meaningful excess free cash flow after paying its high-yielding dividend. It reinvests those funds to grow its portfolio. EPR Properties buys experiential real estate in sale-leaseback transactions and invests in build-to-suit development and redevelopment projects. At its current annual investment rate of $200 million to $300 million, EPR can grow its cash flow per share and dividend at a 3% to 4% annual rate.
Sun Communities
Sun Communities is a REIT that invests in manufactured home communities and RV resorts. Those properties produce pretty durable income. It’s expensive to move a manufactured home, which keeps occupancy high. Lot tenants typically sell their home to a new tenant rather than moving the house. Meanwhile, demand for space in RV parks is strong and growing, with limited new supply.
The company’s properties are so durable that Sun Communities has delivered more than 20 years of positive annual net operating income (NOI) growth. For comparison, multifamily REITs have experienced three periods of declining NOI during that timeframe, because of recessions. Sun has also grown its NOI faster than other REITs, with 5.3% compound annual growth since 2000, compared with 3.2% for the industry as a whole. In addition to steady income growth at its existing locations, the REIT routinely acquires new properties and invests in expanding and redeveloping its existing ones.
Sun Communities’ stable and steadily rising income enables it to pay a resilient and growing dividend. It recently raised its dividend payment by 10.6%.
Great ways to generate passive income
Federal Realty Investment Trust, ERP Properties, and Sun Communities pay attractive and growing dividends. That makes them great options for investors seeking to generate passive income. They should provide investors with durable and growing dividend income for years to come.
Matt DiLallo has positions in EPR Properties and Sun Communities. The Motley Fool has positions in and recommends EPR Properties. The Motley Fool recommends Sun Communities. The Motley Fool has a disclosure policy.