2 Dividend Stocks to Double Up on Now

Some dividend stocks are better hedges in times of inflation that others. Two of these top dividend stocks are STORE Capital (STOR) and Realty Income (O).

Both STORE Capital and Realty Income are in the real estate market, and while they are each unique, they are both strong sources of passive income. 

1. STORE Capital 

STORE (NASDAQ: STOR) has an interesting real estate business model known as the sale-leaseback transaction.

Here is an example of how that model works. Say you want to open a large store. You construct a building and open up your shop. However, you don’t want to have millions of dollars tied up in real estate investments. So, a company like STORE Capital buys the building and then leases it back to you. STORE receives steady rent payments, and you free up money to expand your brand and business. 

This model can be highly profitable, producing attractive returns, but only when executed correctly. STORE Capital is one of those companies that has implemented this strategy effectively. Since going public seven years ago, investors have enjoyed a 119% total return and a steady 5% dividend. Opportunities in this market continue to grow, so STORE will likely experience plenty of growth in the decades to come. 

Here are some highlights from 2021:

• Total revenues were $782.7 million, compared to $694.3 million in 2020
• Net income was $268.3 million, compared to $212.6 million in 2020
• Invested $1.5 billion in 336 properties, compared to an investment of $1.09 billion in 214 properties in 2020

Forecasts show that top line sales are projected to increase by almost 2x for STORE over the next 5 years. If that happens, it will be obvious in retrospect why Warren Buffett holds a large chunk of shares.

2. Realty Income 

There’s a reason why Realty Income (NASDAQ: O) refers to itself as “The Monthly Dividend Company.” This real estate investment trust (REIT) has paid 620 consecutive monthly dividend payments, making Realty Income a dividend aristocrat.

Since 1994, investors have enjoyed a compound average annual total return of 15.5% and a compound annualized dividend growth of 4.4%. 

Because the company is structured as a REIT, Realty Income must pay at least 90% of its taxable income to its shareholders in dividends. As of this writing, the annual dividend yield is 4.11%.

At the end of 2021, Realty Income had a portfolio that included over 11,000 properties across all 50 states, the United Kingdom, Spain, and Puerto Rico. Clearly, their portfolio is well diversified.

Here are some highlights from 2021:

• Realty Income acquired a record $6.4 billion in new properties.
• In December 2021, the company announced its 97th consecutive quarterly dividend increase.
• Adjusted funds from operations (AFFO) increased by 27% to $1.49 billion.

Is Now the Time to Buy Shares of STOR and O?

It’s not difficult to find companies that pay a higher dividend yield than the S&P 500, which both STOR and O do. However, not all yields are equal. These companies are leaders in the real estate space and have strong track records. 

Both STOR and O offer high annual dividend yields that are predictable and stable, inspiring confidence in investors.

As of this writing, those yields are a $0.38 quarterly dividend amount (5.19%) for STOR and 4.11% for O. Unlike some high-yielding companies that are saddled with high debt that puts their dividends in jeopardy, these two stalwarts are likely to stand the test of time, no matter what economic storms hit.