This year's tremendous market volatility led some investors to give up on stocks altogether. But savvy investors know that good times also come with bad, and down markets actually hold some of the best stock-buying opportunities.
Many real estate dividend stocks are still battling rising interest rates and high inflation, making their beaten-down share prices indicators that this is a fantastic time to snap up high-yielding income stocks at a discount.
A $5,000 investment in key dividend stocks could lead to hundreds of dollars in income each year with growth opportunities ahead. If you have money available to invest, here's a closer look at the stocks three Motley Fool contributors believe are no-brainer dividend stocks to buy right now.
1. Blackstone: A leading asset manager with a juicy 5% yield
Liz Brumer-Smith (Blackstone): Blackstone (BX -2.97%) is one of the leading asset management companies in the world with over $951 billion in assets under management (AUM). Unlike other traditional money-management firms that largely invest in traditional investments like stocks, bonds, mutual funds, or commodities, Blackstone invests in alternative assets like real estate, private and public debt equities, life sciences, and new technologies.
High inflation, economic uncertainty, and stock market volatility led a growing number of wealthy individuals and investment firms to turn to alternative asset management companies like Blackstone. In turn, the company grew at an impressive rate.
Its fee-related earnings from the assets it manages for its clients grew by 51% since last year. And its distributable earnings per share year to date through the third quarter of 2022 are up by 36%. In addition, the company is extremely well funded, having $18 billion in cash on hand and an A+ credit rating.
Even with its share price trading 24% lower than last year, its price-to-book and price-to-earnings ratios are higher than its peers. Blackstone, however, pays the highest dividend yield of 5% and has outperformed its peers over the past three, five, 10, and 20-year periods, making up for its somewhat premium pricing. When it comes to stability, growth opportunities, and attractive dividend yields, it's clear why Blackstone is a no-brainer buy today.
2. Digital Realty Trust: An ESG-focused data center REIT
Kristi Waterworth (Digital Realty Trust, Inc): Most of the time, when I'm trying to decide if I'm really interested in owning a stock for the long term, I kind of overthink it. A bit. But there's one dividend stock that I never had a doubt about since I first became aware of it: Digital Realty Trust, Inc (DLR -1.83%).
This is a very specific kind of real estate investment trust (REIT), one that specializes in leasing digital space. They're called data center REITs, and they're only growing as our digital footprints expand ad infinitum. Digital Realty Trust isn't the only data center REIT, but it's the one I will never hesitate to recommend to anyone. It has an extremely fiscally responsible management team that also isn't afraid of taking calculated risks when it comes to expansion. It maintains a commitment to energy sustainability (data centers use a lot of it, after all), and it has an extremely long-term vision.
Many data centers focus on just one or two geographic areas, which can serve them well enough, but Digital Realty Trust is establishing footholds across the planet, including breaking into difficult-to-penetrate emerging markets. Its recent acquisition of Teraco, a data center in South Africa, for example, added to its African holdings, which include data centers in Kenya, Mozambique, and Nigeria.
Along with these expansions into what are still considered new markets, Digital Realty Trust has also spread its risk across the planet, with data centers located in North America, South America, Europe, Africa, Asia, and Australia.
The company has been making these kinds of gambles for some time, and its steadily increasing dividend proves that this strategy is working. Its dividend yield is both sturdy and sustainable at about 4.78%. This year, quarterly dividends were at $1.22 per share, but these dividends grew without stopping since the very first dividend payment of just $0.1563 per share at the end of 2004.
Digital Realty Trust also showed a strong commitment to becoming totally carbon neutral and using 100% renewables to power these facilities, which use an impressive amount of electricity. It's a REIT that I can respect from every angle and one that makes me money while I sleep soundly every night.
3. Agree Realty: A five-tool REIT
Mike Price (Agree Realty): In baseball, a five-tool player is one who can bat, field, throw, hit, and hit for power. A five-tool REIT is one that has a good dividend yield and a strong balance sheet; trades for a value; is growing; and has a stable customer base. I believe Agree Realty may be a five-tool REIT. Let's go over its bonafides.
Agree Realty's (ADC -0.99%) current dividend yield is over 4%. Its yield averaged 3.70% over the past five years and has consistently grown each year over the past 10.
The company's balance sheet is certainly strong. It has almost twice as much equity as debt. The weighted average maturity of its debt is eight years in the future, with just $82 million due prior to 2028.
Agree Realty stock currently trades for 1.38 times book value, less than its 5-year average of 1.80 times and the index average of 3.42. Reversion to its 5-year average would mean a gain of 30% from its current price.
You don't often see high growth among REITs, but Agree's revenue growth from $187.48 million in 2019 to $404.70 million over the last 12 months would be good in almost any industry. Operating cash flow is also growing, from $126.71 million to $329.29 million over the same period.
Finally, Agree's customer base is about as good as it gets. Its biggest tenants include Walmart, Best Buy, Home Depot, and Sherwin-Williams. The biggest concentration, Walmart, is just 6.9% of its total base rent. No tenant sector makes up more than 10%, and 10 different sectors make up at least 4%. It has a diversified customer base of big box retailers that aren't going anywhere.
Splitting up $5,000 across these 3 dividend stocks would add to your passive income immediately while still leaving long-term opportunities for dividend growth and share-price growth as the market recovers. It makes sense to start your analysis with these five tools, but spend time digging deeper into each one and any other relevant info you find along the way.
