It's been a tough year for investors. Broader market volatility and impact from high inflation are putting pressure on investors' portfolios across the board. I'm personally down as much as 20% from last year.
While it pains me to see a portfolio loss to this extent, I'm using today's low prices as buying opportunity. Loading up on high-quality dividend paying stocks that have major growth prospects in the near future.
Three dividend stocks I'm particularly excited about owning in the coming decade are real estate investment trusts (REITs) Digital Realty Trust (DLR 1.73%), Mid-America Apartment Communities (MAA 0.06%), and Realty Income (O -0.03%). Here's why you'll be happy you own these three REITs in 2032, too.
Digital Realty Trust
Virtually everything we do relies on some form of technology from our cars, phones, jobs, and even our household appliances. And our technological reliance isn't slowing down any time soon. The next 10 years will bring loads of new inventions and technologies with it, only furthering our need for data center providers like Digital Realty Trust.
Data centers play an important role in technology today, helping safely store and aggregate digital data. And Digital Realty Trust is one of the largest data center operators in the world. The company operates over 300 facilities in 27 countries, leasing its facilities to clients in diverse industries like life sciences, financial services, artificial intelligence, digital media, and cloud-based services, among others.
Since its IPO in 2004, the stock has outperformed the S&P 500. Today its price sits down 30%. Its beaten-down share price is largely due to concern over short-term headwinds, including reduced bookings and global supply chain issues, making it difficult to receive the necessary technology to build and maintain data center facilities -- which are valid concerns.
However, if we think long term, Digital Realty Trust's prospects for the next 10 years look outstanding. Private equity firms have been doubling down on this sector and acquired a record number of existing data center companies in 2020 and 2021, which shows that many institutional investors see these as valuable assets. It's also a high-barrier-to-entry industry, making it difficult for competitors to compete with a company like Digital Realty Trust. Its dividend yield is nearing 4% today.
MAA
Housing is a basic essential need. Everyone needs a place to live. That's not something that will change 10 years from now. But what can change is where people chose to live. Migration patterns are showing a large population shift toward the Sun Belt of America. Many markets in the sunnier southern states of Texas, Florida, Alabama, Arizona, and Nevada are gaining huge numbers of new residents.
This is fantastic news for MAA, formerly Mid-America Apartment Communities, one of the top multifamily REITs that specializes exclusively in owning and operating apartments in major Sun Belt cities. The company owns roughly 102,000 suburban and urban apartment units in some of the fastest-growing rental markets in the country.
Concern over rising interest rates impacting its cost of borrowing coupled with recessionary impacts on rental housing have pushed its shares down 24% this year. However, the impacts aren't being felt by the company, at least not yet. Its occupancy is at 95.7%, and its rental growth is projected to be 12% this year.
Its shares are currently trading around 21 times its projected price-to-funds- from-operations (FFO), a ratio that works similar to price-to-earnings for REITs. Its favorable pricing makes it a long-term value buy with great growth opportunities. Plus, MAA has maintained 13 years of consistent dividend increases, with its yield paying around 2.5% today.
Realty Income
Some companies are worth owning 10 years from now because of the growth they'll achieve. Realty Income is one you own because of its consistency. Realty Income is one of the most reliable dividend-paying stocks out there. Having raised its dividends 27 years in a row, Realty Income is a Dividend Aristocrat that also pays monthly.
The REIT owns and leases over 11,400 properties primarily in the retail industry. However, recent expansion efforts are helping add more diversity to its portfolio through more nonretail properties -- a move that should continue to pay off for the company over the next 10 years.
The REIT's great dividend track record and alluring 4.4% dividend yield today are what draw a lot of investors to the stock. But it's worth noting that Realty Income has outperformed the S&P 500 for the past 27 years. Its price hasn't taken nearly as much of a beating as other REITs, down around 7% year to date, but given its reliability, it's a stock you'll surely be happy owning in 2032 regardless of its price today.
