Warren Buffett owns a lot of stocks, many of which pay dividends. However, his company, Berkshire Hathaway (BRK.A -0.34%) (BRK.B -0.01%), only owns one real estate investment trust (REIT): STORE Capital (STOR). It pays a big-time dividend that currently yields 5.8%.
If you're a Warren Buffett follower and like STORE Capital's real estate-backed dividend, you'd probably also love the payouts of fellow REITs Agree Realty (ADC 1.16%) and W.P. Carey (WPC 0.16%). Here's a closer look at these dividend stocks, which have some even more attractive features than STORE Capital.
Same properties with a more frequent dividend
STORE Capital focuses on owning single-tenant operational real estate supporting companies in the manufacturing, service-oriented retail, and service sectors. The REIT leases these buildings under long-term triple net leases, making the tenant responsible for building insurance, real estate taxes, and maintenance. That provides STORE Capital with very stable rental income to support its dividend.
Agree Realty has a similar focus. It owns freestanding properties leased to essential retailers like grocery stores, home improvement stores, auto service centers, and pharmacies. It utilizes net leases if it owns the buildings and ground leases if it only owns the underlying land. Both lease structures provide it with steadily rising rental income.
Agree Realty uses that income to pay an attractive dividend yielding 3.7%. While that's not as high as STORE's dividend yield, what sets Agree Realty apart is that it makes monthly dividend payments. That makes it an even more appealing option for investors seeking passive income.
Another thing that stands out about Agree Realty is its ability to grow the dividend. The REIT has expanded its payout at a 6.1% annual rate since 2015, outpacing STORE Capital's 5.9% growth rate.
An even more diversified portfolio
W.P. Carey also focuses on owning operational critical real estate net leased to high-quality tenants. However, it has a much more diversified real estate portfolio than STORE Capital. Its portfolio currently consists of properties in the industrial (26% of its annual base rent), warehouse (24%), office (20%), retail (16%), self-storage (5%), and other (9%) sectors. That's much wider industry diversification than STORE Capital, which gets its rental income from tenants in the manufacturing (21%), service-oriented retail (15%), and service (64%) sectors.
W.P. Carey is also much more diversified geographically. STORE Capital currently focuses on owning real estate in the U.S., while W.P. Carey gets 64% of its rental income from the U.S., 33% from Europe, and 3% from other areas.
That greater portfolio diversification helps reduce W.P. Carey's risk profile, improving the stability of its 5.1%-yielding dividend. It also gives the company greater flexibility to continue growing. For example, last year, it made a record $1.73 billion of investments, driven by the opportunities it found to acquire properties in the warehouse and industrial sectors. More than 70% of its acquisition volume was in those two property classes. It also saw a lot of deals in Europe, representing 40% of its volume in 2021.
W.P. Carey's ability to continue expanding has enabled the company to steadily increase its dividend. The diversified REIT has given its investors a raise every year since its public listing in 1998. With a vast opportunity set and a solid financial profile, the REIT should have no problem continuing to grow its portfolio and dividend in the future.
High-quality dividend stocks
STORE Capital pays a high-yielding dividend, making it an enticing option for dividend investors. However, while it's the only REIT owned by Berkshire Hathaway, it isn't the only great one out there. Investors who like this Buffett-owned REIT will likely love Agree Realty and W.P. Carey, given the former's monthly payments and the latter's more diverse portfolio.
