Income investors looking for high-yield stocks with safe dividends should take a closer look at real estate investment trusts, or “REITs.”
This is because REITs typically have high dividend yields, making them appealing for income investors.
Even better, a few of the top REITs to buy have safe dividends. These equities hold up during recessions and continue to announce regular dividend increases.
The following three picks are great examples of this. They should have broad appeal for income investors because they offer safety, high dividend yields, and a history of dividend growth.
Equinix (EQIX)
Equinix (NASDAQ:EQIX) is a REIT that specializes in data centers. The trust operates 260 data centers across the world that serve over 10,000 customers.
The company also has a segment called Interconnection Solutions dedicated to digital infrastructure. It says these solutions allow for high-quality, quick, an secure connections between its data centers.
Equinix’s competitive advantage is that its global platform spans 33 countries and contains the industry’s largest and most active ecosystem of partners. This helps create a network effect that improves performance and lowers cost for customers.
Because of this, EQIX has grown revenues for 21 years straight, and the company’s bottom line has also been on an uptrend for over a decade.
Plus, the company delivers on dividend growth. In October 2023, Equinix announced a 25% increase to the dividend to $4.26 per share. The forecast payout ratio of 49% for 2024 is well covered, and leaves plenty of room for more dividend increases. EQIX has increased its dividend for 8 consecutive years and currently yields 2.2%.
Public Storage (PSA)
Public Storage (NYSE:PSA) has been around since 1980 and owns an interest in about 2,900 properties that lease storage space, typically on a month-to-month basis, making it the largest such entity in the United States. The trust produces about $4.7 billion in annual revenue.
To further its industry leadership, Public Storage continues to grow. It opened one newly developed facility in the first quarter, which added 0.3 million net rentable square feet. And after March 31, Public Storage acquired or was under contract to acquire four self-storage facilities worth another 0.3 million net rentable square feet.
Future growth for PSA will be driven organically, as well as through a major acquisition. In 2023, Public Storage acquired Simply Self Storage from Blackstone Real Estate Income Trust (OTCMKTS:BSTT) for $2.2 billion.
Public Storage has been able to double its revenue over the past decade and 9.7% over the last five years. Other quality metrics have largely improved over the past decade, too. For example, margins have moved meaningfully higher, while its debt is relatively low. As a result of its conservative financing, Public Storage has an industry-leading AA credit rating. This speaks to its safety as a dividend stock in 2024.
The dividend payout ratio is reasonable, at approximately 71% for 2024. PSA stock has a current yield of 4.2%.
American Tower (AMT)
American Tower (NYSE:AMT) owns multi-tenant communications real estate, with a portfolio of more than 224,000 communications sites.
The company has established an exceptional record in the last decade, and many of those tailwinds still exist today. It is a leader in the U.S. market and is expanding abroad. The continued increase in data use, especially internationally, will be a trend for some time. Moreover, with long-term leases in place, American Tower has good visibility into the future.
American Tower enjoys a competitive advantage in that switching costs for its customers (once equipment is installed) are quite high. Meanwhile, the company enjoys economies of scale as it grows larger, with the cost to add additional tenants to a tower being essentially negligible. Further, unlike its other U.S. counterparts, American Tower is geographically diversified. The continued ramp up of 5G, which benefits the REIT, will also help it continue to grow its dividend and adjusted funds from operations.
There is plenty about AMT stock for income investors to like. AMT has increased its dividend for 13 consecutive years and shares currently yield 3.4%.
On the date of publication, Bob Ciura did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
