It's not unreasonable to argue that no matter what is happening in financial markets, there will always be intelligent investments available. After all, there are thousands of publicly traded companies on the planet.
Real estate investment trusts (REITs) can be a great fit in a diversified dividend stock portfolio. Here are two world-class REITs that income investors should consider buying this month to hold for the long run.
Image source: Getty Images.
1. American Tower: Rising mobile data consumption is a big growth catalyst
Often, we don't fully appreciate the process that goes on behind the scenes to provide us with the goods or services that we take for granted daily. You're probably aware that mobile data service providers such as Verizon Communications (NYSE: VZ) transmit signals from cell towers. But what you may not know is that cell tower space to make data transmission possible is rented out to telecom companies by the likes of American Tower (AMT -0.70%).
The company's unrivaled portfolio of approximately 226,000 communications assets like cell towers, distributed antenna systems, and data centers supports a whopping $91 billion market capitalization. These assets are spread throughout an assortment of 26 economically developed and economically developing countries in North America, South America, Europe, Africa, Asia, and Oceania.
As the world increasingly relies on mobile data for mobile gaming, shopping, and checking emails, the need for additional communications sites will only grow from here on out. That is why the average monthly data consumption per smartphone user is expected to spike by over 100% to nearly 200% from 2023 to 2028 in major markets like the U.S., India, and South Africa. This should fuel healthy adjusted funds from operations (AFFO) per share growth in the years to come for American Tower.
Along with the fact that the dividend payout ratio is poised to register at around 65% in 2023, there should be plenty of room for growth in the payout moving forward. Compared to the S&P 500 index's 1.5% dividend yield, this makes the REIT's 3.3% yield especially attractive. Dividend growth investors can purchase shares at a current-year price-to-AFFO-per-share ratio of just above 20, which isn't excessive for American Tower's growth prospects.
2. Agree Realty: A monthly dividend payer you can trust
With more than 1,900 properties across the United States, Agree Realty (ADC -0.48%) is a well-established retail REIT. The company buys retail properties from clients who agree to lease them back from Agree Realty at 10-year-plus weighted-average lease terms with lease escalators built into the contract. In exchange, clients can use the capital proceeds from such a transaction in any way that they want, including business expansion or debt reduction.
As you'd come to expect from a massive triple net lease REIT, Agree Realty is quite balanced. The company's largest retail tenant sector of grocery stores accounted for just 10.5% of annualized base rent (ABR) as of March 31. Agree Realty's top 20 tenants made up just over half (56.9%) of its ABR as of March 31. This is ideal because troubles in any one retail sector likely won't be adverse enough to sink the company.
That is precisely how Agree Realty's annualized dividends per share paid have compounded at greater than 6% annually over the past decade. In combination with a dividend (4.5% yield) that is paid monthly and is triple the S&P 500 index's yield, this provides an optimal mix of starting income and growth potential. Best of all, the stock looks to be slightly discounted for income investors. Agree Realty's trailing 12-month (TTM) dividend yield of 4.4% is near a five-year high and slightly higher than its 10-year TTM dividend yield of 4.1%.
