Dividend stocks are an attractive option in any economic cycle, and at times like these, with inflation here and recession looming, stocks in sectors that traditionally provide a particularly good defense against downturns might be doubly so.
That's why I'm doubling down on a couple of real estate stocks I own now and will soon be buying shares of a couple of big names in the utilities and telecommunications businesses. They each have good dividend records and with their current share prices, a nice yield, too.
They are Agree Realty (ADC 1.67%), Gladstone Commercial (GOOD -1.20%), Verizon Communications (VZ -1.33%), and Consolidated Edison (ED 0.15%).
ADC Dividend Yield data by YCharts
1. Agree Realty
Agree Realty is a real estate investment trust (REIT) and owner of more than 1,500 retail properties across the country with a long history of rich shareholder return. And it's not a cratered price that's pushing up this yield from below. Agree stock is up about 3.3% so far this year, and over the past 10 years it has crushed the S&P 500 in total return by about 63 percentage points.
The past, present, and future all provide reasons for confidence that Agree will continue to make income investors happy. First, there's the compound average annual return of 12.5% since its IPO in 1994.
Then there's the present: Agree's top three tenants, in order of base rent, are Walmart, Tractor Supply, and Dollar General, and there are numerous other investment-grade occupants keeping the portfolio more than 99% leased.
Looking ahead, Agree also added 124 properties in the first quarter to the tune of about $430 million and plans a similar trajectory for the rest of the year.
2. Gladstone Commercial
Gladstone Commercial is also a REIT and it also pays monthly, but it's in a different line of business. Its portfolio of about 130 net-leased office and industrial properties in 27 states is currently pumping out the rental income to support an inflation-fighting yield of about 7.9% at a share price of about $19.
That share price, by the way, is down sharply -- more than 25% year to date. But the yield has remained right around 8% nearly the entire time since this stock went public in 2003, and it's now made 189 consecutive monthly cash distributions.
In a business update in June, Gladstone Commercial reported that portfolio occupancy was 97%, all the May rent had been collected, and it had just bought three new distribution and manufacturing properties in Alabama, Ohio, and North Carolina.
That same update included this: "We remain within a small subset of U.S. equity REITs that have maintained their dividend rate and payment of distributions in tandem with this high level of rental collections during the COVID-19 pandemic."
That battered share price and solid dividend record also yield a price-to-funds-from-operations ratio of a minuscule 9.8 -- about half that of Agree Realty's -- which makes now look like a particularly good time to buy this dividend machine.
3. Verizon Communications
Verizon Communications is one of the most closely followed and widely held stocks in the market and for good reason: It's also one of the country's largest providers of mobile telephone service, about as essential, perhaps at least psychologically, to hundreds of millions of Americans as food and shelter.
Verizon is coming off a first quarter that saw an 11% increase year over year in wireless activations as it continues to expand 5G rollout opportunities, including mobile edge computing and streaming services expansions with partners like HBO.
I've been considering buying Verizon stock for years and just have never done it, figuring it was more of an income than a growth play. Now that I'm a retiree and more interested in dividend income than ever, I think it's time to make that move.
A yield of about 5% and a record of 18 straight years of dividend increases make Verizon appear to be a very blue chip stock indeed. And, heck, I've been paying them every month since they were Bell Atlantic. They might as well pay me some, too.
4. Consolidated Edison
I don't pay Consolidated Edison every month, but about 10 million other folks do. That's how many customers to whom this oldest member of the New York Stock Exchange delivers electricity, natural gas, and even steam in and around the Big Apple.
Con Ed is a prime example of a defensive stock, given the essential nature of its business and the monopoly it has as a protected utility. And adding to this utility's utility is its record of 48 straight years of dividend increases, giving it a yield of about 3.4% at the moment.
Trading at about $93 a share, Con Ed stock is in the middle of its 52-week price range, which seems typically steady for this most venerable producer of power and passive income.
Adding to existing shares and opening new positions
I already own shares of Agree and Gladstone Commercial and plan soon to begin investing in Con Ed and Verizon Communications. They all make sense as solid choices for a diversified portfolio of income stocks to supplement the Social Security draws I plan to start soon, when I arrive at my full retirement age.
