Real estate investment trusts (REITs) are known for offering higher dividend yields than most of the stocks listed on the S&P 500. But while these stocks feature higher yields, a good dividend isn’t enough to justify buying shares. Some stocks with dividend yields well above 5% end up generating mediocre returns and falling behind the market. So in order to maximize their returns, dividend investors should look for companies with both respectable yields and appreciation. Investors looking to diversify their portfolios into top REITs with dividends may want to get started with these three picks.
Stag Industrial (STAG)
Stag Industrial (NYSE:STAG) is a real estate investment trust that invests in storage facilities and warehouses. The firm has 568 buildings spread across 41 states. Many of Stag Industrial’s tenants stay on board for many years through long-term leases. The company’s 97.6% occupancy rate highlights this fact. That means stable cash flow and insulation from economic uncertainty.
This REIT continued to grow in the third quarter. Stag Industrial increased its net operating income by 6.7% year-over-year (YOY). The company also invested $204.3 million into 12 buildings in the third quarter. These buildings consist of 1.5 million square feet.
Bill Crooker, CEO of Stag Industrial, shared positive remarks about the company’s performance and long-term focus. He mentioned that the company is “well positioned” to capitalize on opportunities and is waiting for when the time is right. That sentiment reflects a firm with a strong financial position that is still eying long-term growth for shareholders. In the meantime, investors get to enjoy a dividend yield of 4%. Investors interested in REITs with dividends should definitely take a closer look at STAG.
Digital Realty Trust (DLR)
Digital Realty Trust (NYSE:DLR) invests in data centers and has many big tech companies as its tenants. Data centers are a critical expense for many online corporations which means a steady stream of annual recurring revenue. Digital Realty Trust has invested in over 300 data centers, has over 5,000 customers and has data centers on six continents with more than half of them located in North America. Artificial intelligence is likely to amplify DLR’s gains making it one of the top REITs right now.
DLR is the fifth largest publicly traded REIT and offers an enticing 3.6% dividend yield. The firm has maintained an average 10% compounded annual growth rate for its dividend from 2005 to 2022. While DLR shares have only gained 18% over the past five years, the booming demand for artificial intelligence has resulted in more gains for recent investors. Digital Realty Trust is up by 31% year-to-date (YTD) and has outperformed the S&P 500 during that same amount of time.
Mid-America Apartment Communities (MAA)
Mid-America Apartment Communities (NYSE:MAA) is a REIT that prioritizes apartment buildings in the Sun Belt region of the U.S. The firm looks for areas experiencing above-average growth and has successfully navigated many economic booms and busts. MAA has paid a consistent dividend since 1994 and currently has a 4.3% dividend yield. Shares are down 16% YTD but are up 28% over the past five years. The recent drop presents a buying opportunity for long-term investors.
In the third quarter, MAA experienced a slight drop in funds from operations (FFO) per share. The corporation reported $2.16 FFO in Q3 2023 compared to $2.19 FFO during the same period in 2022. However, funds from operations increased YOY in the nine months ending Sept. 30. For Q3, revenue inched up by 4% YOY. Net income was down YOY but the company maintained a healthy 20% net profit margin.
The company is enduring some headwinds at the moment, but the elevated dividend and MAA’s long history of rewarding shareholders make it a good choice for patient investors looking for top REITs with dividends.
On this date of publication, Marc Guberti held a long position in MAA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
