Investors usually need to be cautious around stocks with higher dividend yields. An outsize payout often indicates that the company has a higher risk profile.

However, that's not always the case. Alexandria Real Estate Equities (ARE -0.90%) and VICI Properties (VICI -0.28%) currently pay high-yielding dividends backed by high-quality financial profiles. Because of that, income-seeking investors can buy these real estate investment trusts (REITs) right now without hesitating.

The healthiest player in this challenging space

Alexandria Real Estate Equities showcased the strength of its operations when it recently reported its second-quarter results. While many of this office REIT's peers are struggling these days, it continues to thrive because it primarily owns lab space leased to life science companies.

The company's funds from operations (FFO) grew nearly 7% from the year-ago period. Most of its existing leases have annual rental escalations of around 3%. Meanwhile, strong demand for space in its properties is driving robust rent increases when legacy leases expire. Rents on leases signed this year are up 35.1% on average from the prior rates on the same spaces.

The REIT's high-quality portfolio should continue generating steadily rising income to support its dividend. The payout currently yields 3.9%, more than double the 1.5% yield of the S&P 500. And the company further supports that payout with excellent financial metrics. It has a low dividend payout ratio (55% of its FFO in the past quarter), allowing it to retain cash to help fund new developments.

Its investment-grade credit ratings rank it in the top 10% of all publicly traded REITs, and its loans are primarily long-term, fixed-rate debt, insulating it from rising rates. Its current leverage ratio of 5.2 matches the second-lowest level in its history. The strength of its balance sheet gives it the financial flexibility to make acquisitions and invest in development projects.

The company has an extensive backlog of projects under development, with 70% of that space already leased out, giving it lots of visibility into future income.

The growth from rising rents and development projects should enable Alexandria to continue increasing its dividend. It raised its payout by 5% over the past year and has grown it by an average of 6% annually since 2019.

A rapidly growing portfolio

VICI Properties also recently reported a strong second quarter, with revenue up by nearly 36% and adjusted FFO increasing by almost 12% per share.

Over the past year, the REIT's rapidly expanding portfolio of experiential real estate has added several casinos and other financing deals. 

During the second quarter, VICI agreed to acquire the real estate of four of Century Casinos' gambling properties in Canada. The two companies also partnered to acquire the Rocky Gap Casino and Resort in Maryland, with VICI buying the real estate and leasing it back to Century, which acquired the casino's operating assets. The REIT also expanded its partnership with Canyon Ranch, an operator of wellness resorts.

VICI's growing portfolio and rental income support a dividend that currently yields 4.9%, with a reasonable dividend payout ratio of less than 75% of its adjusted FFO. That enables it to retain some cash, and along with a strong investment-grade balance sheet with lots of liquidity, it has the flexibility to continue adding new investments while growing the dividend.

VICI has given investors a raise in each of the five years since its formation, including an 8% hike late last year. Its growing portfolio and rock-solid financial profile should keep those increases coming.

Lower-risk income stocks

Alexandria Real Estate Equities and VICI Properties recently reported strong second-quarter results, driven by healthy demand for their properties and the continued expansion of their portfolios. The resulting increases in rental income have put their dividends on even firmer foundations.

And with the sort of financial profiles that enable these REITs to continue expanding, that should allow them to keep raising their already attractive dividends. Because of that, income-focused investors can buy their shares without hesitation.