For investors in search of passive income, it's relatively easy to find stocks that pay dividends, but it's hard to find stocks that increase their payouts consistently for decades on end. That's one of the reasons why income investors should be taking a closer look at National Retail Properties (NNN 0.44%). But it's not the only reason why this dividend stock is a no-brainer today.
What does National Retail Properties do?
National Retail is pretty simple to understand. It owns single-tenant properties exclusively in the domestic retail sector. These buildings tend to be fairly generic and easy to re-lease or sell if there is tenant turnover. It also uses triple net leases, which means its tenants are responsible for most of a property's operating costs. Although any single asset is high-risk, across a large enough portfolio National Retail's approach is actually pretty low-risk. The real estate investment trust (REIT) owns over 3,300 properties.
One interesting fact to keep in mind is that National Retail focuses on relationships. This is highlighted by the fact that over 70% of its acquisitions since 2007 have been driven by deals with existing tenants. Those deals also result in higher returns, but it's still a win/win because the tenant knows it has a trustworthy partner that can execute. Simply put, National Retail is a very well-run net lease REIT. But that's just the start for dividend investors.
A few informative charts
For starters, the strong core operations here have translated into an enviable dividend growth history. National Retail would normally qualify as a Dividend Aristocrat since it has raised its dividend payout annually for 33 consecutive years. However, only S&P 500 stocks qualify for that designation. But the lack of an official designation doesn't take away from this REIT's impressive run of regularly increased payouts, which it managed to do through the very difficult 2020 pandemic period, the 2007-09 Great Recession, and the 2000 tech bubble.
NNN Dividend Per Share (Quarterly) data by YCharts
The average annual increase hasn't been huge, but when you reinvest the dividends (which is the total return price) the compound growth of your investment here starts to take off. As the chart below shows, the stock price increased around 450% since 1990, but reinvesting dividends pushed the total return up to 5,200%.
And, right now, the stock is on the outs with investors because of the current bear market, recession fears in the retail sector, and inflation worries. Since dividend yield and stock price tend to move in opposite directions, that's pushed the yield up to its highest levels since the 2020 pandemic-led bear market.
NNN Dividend Yield data by YCharts
All in, the picture investors should get is that National Retail is a well-run net-lease REIT that has a long history of rewarding investors well and is currently trading at an attractive yield point.
You'd be hard-pressed to find better
No stock is perfect and National Retail has its issues -- for example, an economic downturn would likely pressure rent collection rates. But given the long and successful history here, dividend investors would be wise to think long-term when considering this REIT. And on that score, this high-yield dividend stock is one worth examining very deeply and, if you buy it, holding on to for a very long time.
