If you're a glass-half-full kind of person, last year's stock market sell-off presents a great opportunity, especially if you like to collect dividend income. Many stock prices are much lower, pushing dividend yields higher. Because of that, several spectacular dividend stocks look like great buying opportunities.
Three top-notch dividend stocks that currently stand out to a few Fool.com contributors are Community Healthcare Trust (CHCT 1.39%), American Tower (AMT 0.14%), and Tanger Family Outlet Centers (SKT -0.41%). This trio offers attractive payouts that should keep growing. Because of that, these dividend stocks are magnificent options for income-seeking investors to buy right now.
A healthy dividend stock
Matt DiLallo (Community Healthcare Trust): Community Healthcare Trust doesn't get the attention it deserves. While many real estate investment trusts (REITs) strive to increase their dividends at least once each year, the healthcare REIT has given its investors a raise every quarter since its initial public offering in 2015. That's a magnificent track record that few in the sector can match.
Community Healthcare should be able to continue growing its payout. It has a diversified portfolio of healthcare real estate, which helps supply it with stable rental income. The company also has a healthy financial profile. It has a reasonable dividend payout ratio at less than 80% of its funds from operations (FFO) last quarter and a conservative balance sheet. That gives it the financial flexibility to continue acquiring income-producing healthcare real estate.
The company had deals in place to acquire 20 properties for $71.6 million that it expected to close by the end of last year. It also had five more properties under contract for a total of $117.5 million that it expected to close as construction wraps up this year. These new additions should help grow its rental income, giving the REIT more cash to pay dividends. The company's diversified approach should continue providing attractive investment opportunities.
Despite that continued growth, shares of Community Healthcare Trust have been under pressure since the market peaked early last year, declining by about 12%. That has pushed the dividend yield up over 4%. Because of that, now's a great time to buy this spectacular stock.
American Tower just keeps padding its payouts
Marc Rapport (American Tower): "Magnificent" is a strong adjective to describe something as seemingly mundane as a stock, perhaps, but it's not hyperbole when attached to American Tower.
Since going public in 1998 as a pioneering pure play in the burgeoning cellphone infrastructure space, this REIT has more than doubled the S&P 500 in total return, establishing a sterling record as both a growth stock and reliable source of dividend income.
Over that time, the Boston-based company has built the largest portfolio of mobile towers and distributed antenna systems on the planet, a growing collection of about 223,000 communications sites that includes more than 43,000 in the United States alone.
The company makes its living by renting must-have tower space to all the major mobile carriers and thousands of other customers. And a good living it's been for the trust and its shareholders alike. American Tower has raised its dividend for 44 straight quarters, an 11-year stretch that has seen the payout grow by 643%, earnings per share by 472%, funds from operations per share by 364%, and the share price by about 250%.
And now, as the rollout of 5G technology and other new communications standards is just further increasing the dependence of modern life on digital connections, the company is also investing billions in a companion industry: data centers (with the purchase of fellow REIT CoreSite for about $10.1 billion in a deal that closed last January and now gives American Tower a 27-center, 10-city operation).
American Tower holds a strong, growing position as the provider of essential space and services to a recession-resistant industry that itself just keeps growing every year. This REIT's past performance and future prospects both seem, in a word, magnificent.
So far, consumer spending is holding up
Brent Nyitray (Tanger Factory Outlet Centers): Tanger Family Outlets is one of the leading operators of outlet centers in the United States and Canada. As of Sept. 30, 2022, Tanger operated 29 outlet centers with 11.3 million square feet of gross leasable area. It also has an interest in six other centers with one under construction.
The outlet mall concept entails established retailers introducing a second outlet for some of their goods. For example, a brand might ordinarily sell its products in luxury department stores, but will introduce an outlet store where items are sold at a discount. The discount is from eliminating the middleman and also a way for the retailer to move overstocked merchandise. These outlet centers need to be far enough away from the malls that they don't compete directly, which means they are usually found outside of urban areas on the interstate.
With the U.S. economy potentially poised to enter a recession retailers will be vulnerable to a sell-off. However, the REIT sector has already been beaten up last year as interest rates have increased. The U.S. labor market remains remarkably resilient and if anything the Federal Reserve is concerned that wages might be rising too fast. This doesn't really lay the framework for a collapse in consumer spending.
The outlet centers might be an attractive destination for shoppers who want to save money compared to paying full freight in luxury department stores. Rising interest rates won't affect Tanger's debt too much either, as the company has no major debt maturities until 2026. Tanger hiked its quarterly dividend by 10% to $0.22 per share during the third quarter. At current levels, the stock has a dividend yield of 4.8%.
