A healthy lifestyle for many people means living longer and more time spent in retirement. But Social Security can only go so far for most people, adding to the importance of using investments to provide income during the post-work years.
Dividend-paying stocks are a natural choice here, with the added potential benefit of long-term capital appreciation that can help offset inflation.
Real estate investment trusts (REITs) are a good option. They own income-producing assets and are required to pay no less than 90% of their taxable earnings to shareholders as dividends.
Three to put on your list of best real estate dividend stocks to consider buying now are Digital Realty (DLR 0.67%), Gladstone Commercial (GOOD -0.23%), and Realty Income (O 1.46%).
DLR dividend yield. Data by YCharts.
We're looking for consistent revenue flow, and the chart above shows how these three REITs have delivered it since the Great Recession. They also would add diversification, since they're in different real estate sectors that each responds to its own market conditions.
1. Digital Realty
Digital Realty's stock is down about 38% so far this year, twice the decline of the S&P 500, but its role as an essential provider of infrastructure to the digital world has not gone away. This REIT operates about 300 data storage centers around the world with a client list that numbers in the thousands and is led by Amazon, Microsoft, Oracle, and Alphabet's Google.
Along with the general market malaise, Digital Realty doubters point to concerns about its biggest customers becoming its competitors as they build out their own data operations. But this REIT just keeps expanding its operations and its income as a turnkey solution for companies, governments, and other organizations to get on the cloud quickly and efficiently.
There's significant upside here, too, if the analysts are to be believed. They give the stock a consensus price target of $160.71. It's now trading for about $108 a share, and after 17 straight years of dividend increases, it yields about 4.5%.
2. Gladstone Commercial
Gladstone Commercial is a much smaller REIT than the other two here but with a much bigger yield, and that's not by accident. This owner of 136 industrial and office properties in 27 states has been a dividend machine since it went public in 2003.
David Gladstone, chief executive officer, told the Motley Fool in a recent interview that this REIT and the other publicly traded companies under his purview are managed with income in mind and an eye toward attracting retirees on Social Security and other income investors.
Gladstone says to keep that record going, the company is shedding office properties in favor of industrial buildings, including manufacturers and logistics sites, that he considers more promising. Meanwhile, investors can enjoy a current yield of more than 8% from a company that hasn't missed or reduced a monthly dividend payment in its nearly 20-year history.
3. Realty Income
If monthly income is music to a retiree's ears, then the "Monthly Dividend Company," as Realty Income calls itself, is a hit. This retail REIT has paid shareholders 12 times a year without fail for more than 50 years, and it's raised that payout at least once a year for more than a quarter-century, putting it among the ranks of Dividend Aristocrats.
Realty Income generates reliable cash flow from a portfolio of more than 11,000 properties and an emphasis on single-tenant retailers signed to long-term net leases that require the tenant to pay for items like taxes, insurance, and maintenance. The tenant list, meanwhile, includes a who's who of essential retailers including Walgreens, 7-Eleven, and Dollar General.
Realty Income yields 4.7% and trades for about $63 a share. Analysts give it a consensus target price of $76.57, meaning they see significant upside for this long-term provider of reliable income for retirees -- and for people who are still on the way there.
