You work hard for your money, and your money should work hard for you. It's not doing that by sitting in a bank, considering that the national average interest rate for a savings account is currently 0.13%, according to Bankrate.
One way to put your idle cash to work making you more money is by investing in dividend stocks. Three rock-solid passive income producers are Extra Space Storage (EXR +1.74%), Realty Income (O +0.51%), and W.P. Carey (WPC +0.25%). All three have fortress-like financial profiles and excellent track records of growing their dividends. That makes them relatively safe ways to turn your cash into a wealth creator.
NYSE: EXR
Key Data Points
An enriching REIT
Extra Space Storage pays an attractive dividend, enabling investors to turn their idle cash into a lucrative income stream. The self-storage real estate investment trust (REIT) currently yields 2.9%, which means it can turn $1,000 in cash into a $29 annual passive income stream, significantly more than the $1.30 it would earn in the bank.
That income stream will likely grow over the years, further enriching investors. The REIT has a long history of increasing its dividend, giving investors a 50% raise this year while growing it by 92.3% over the last five and 650% over the past decade. That rapidly rising income stream has enabled the REIT to produce outstanding total returns (dividend income plus price appreciation). Overall, it has delivered a more than 430% total return (24.1% annualized), turning a $1,000 investment into more than $8,600.
Driving the REIT's ability to grow is its fortress-like balance sheet, which gives it the financial flexibility to go on the offensive and expand its portfolio. Extra Space takes a defensive position by maintaining an investment-grade credit rating backed by low leverage metrics. That allows it to strike when acquisition opportunities arise, which helps grow its portfolio, rental income, and dividend. Given its current financial strength, Extra Space should have no problem defending its dividend and continue growing in the coming years.
NYSE: O
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Proven durability
Realty Income pays one of the most reliable dividends in the REIT sector. The company has made 626 consecutive monthly dividend payments throughout its 53-year operating history. It has also increased its dividend payment 116 times since its public listing in 1994, including in the last 99 straight quarters. Overall, the REIT has grown its payout at a 4.4% annual rate while producing total returns of 15.1% annually.
Realty Income's current dividend yield is 4.2%, enabling investors to turn their idle cash into a lucrative income stream. Given the REIT's history, the dividend payment should continue its steady rise in the future.
The REIT defends its dividend with one of the strongest financial profiles in the sector. It has A-rated credit and a defensive dividend payout ratio. That gives it the financial flexibility to continue expanding even when the real estate market turns south. Its ability to continue battling during difficult times makes it stand out as one of the strongest dividend payers in the REIT sector.
NYSE: WPC
Key Data Points
Built on a rock
W.P. Carey also has an excellent dividend track record. The diversified REIT has increased its payment every year since its initial public offering in 1998. It offers a higher yielding dividend that's currently 4.9%.
The company has put its dividend in a very defensible position. It has a durable real estate portfolio that generates steady rental income, a conservative dividend payout ratio, and a rock-solid investment-grade balance sheet. That strong financial flexibility gives W.P. Carey the ability to continue expanding its portfolio of income-producing properties.
W.P. Carey's financial strength enabled it to be more aggressive in its expansion this year despite rising interest rates and a slowing economy. It acquired a non-traded REIT it used to manage for $2.7 billion and bought $1.1 billion of real estate. The REIT also increased its full-year investment volume target range to $1.75 billion-$2.25 billion. These deals should enable W.P. Carey to continue growing its rental income and dividend.
Built to survive any battle
Extra Space Storage, Realty Income, and W.P. Carey have been dividend warriors over the years. The REITs have steadily increased their payouts, which is impressive considering the turbulence the economy and real estate sector has endured. They've proved to be lower-risk investments, making them ideal for those looking to put their idle cash to work generating income.
