Becoming a millionaire by the time you retire isn't out of reach. For example, investing $300 each month into an equal-weight S&P 500 index fund should grow into $1 million in about 41 years (assuming a 7.7% average annual total return, which it has delivered over the last 50 years). You could become a millionaire even faster if you invest more money each month or find higher-returning investments. For example, dividend-paying stocks have historically delivered a 9.2% average annual total return. That rate of return could grow the same $300 monthly investment into $1 million in about 36 years.
W. P. Carey (WPC 0.56%), NNN REIT (NNN +0.09%), and Crown Castle (CCI +2.75%) stand out for their dividend-paying capabilities. All offer dividend yields above 5%, which is several times above the S&P 500's current average of around 1.5%. Here's a look at whether that could help make their investors millionaires by the time they retire.
Shifting gears to reaccelerate
NYSE: WPC
Key Data Points
W. P. Carey has been an enriching investment over the years. The diversified real estate investment trust (REIT) has delivered a 10.9% average annual total return since it came public a quarter century ago. At that rate, it would turn a $300-a-month investment into $1 million in about 32 years.
The company has delivered those strong returns by steadily expanding its portfolio of income-producing real estate. That has enabled it to routinely increase its dividend. W. P. Carey has raised its payout every year since going public.
Unfortunately, that's about to change. W. P. Carey abruptly decided to exit the office sector in late September. It spun off a big chunk of its office portfolio to investors by creating Net Lease Office Properties. It's planning to sell the remaining properties by early next year. As a result of this portfolio shift, the company intends to cut its dividend (which currently yields 7.3%) by 20% this quarter.
However, the move will enable W. P. Carey to retain more cash to invest in higher-growth property sectors, like warehouse and industrial. Because of that, the REIT could grow its earnings and dividend faster in the future. That puts it in a strong position to continue producing market-beating total returns in the coming years.
A steady wealth creator
NYSE: NNN
Key Data Points
NNN REIT has been the model of consistency over the years. The retail REIT has increased its dividend for 34 straight years, the third-longest streak in the REIT sector. That steadily rising payout has helped it produce an 11.5% average annual total return. At that rate, it would grow a $300-a-month investment into $1 million in about 31 years.
NNN REIT has a very simple business plan. It buys single-tenant properties triple-net leased (NNN) to expanding national and regional retailers. Its portfolio features convenience stores, auto-service locations, restaurants, family entertainment centers, RV dealerships, health and fitness centers, theaters, equipment-rental facilities, and wholesale clubs. It develops relationships with tenants in these industries, enabling it to source new acquisition opportunities as they expand.
NNN REIT is in an excellent position to continue expanding its portfolio and 5.7%-yielding dividend. It has a reasonable dividend-payout ratio for a REIT (69% in the third quarter), enabling it to retain cash to fund new investments. It also has a conservative balance sheet, giving it additional flexibility to acquire more income-producing retail properties. The company's income and growth combination puts it in a solid position to continue producing attractive total returns.
Towering total returns
NYSE: CCI
Key Data Points
Crown Castle has delivered a 10.1% annualized total return since its initial public offering (IPO) in 1998. The infrastructure REIT would grow a $300-a-month investment into $1 million in about 34 years at that rate.
The cell tower company has grown its dividend by 7% annually since 2016, which aligns with its long-term target of increasing its dividend by 7% to 8% per year. Unfortunately, the company has hit a bit of a speed bump in 2023. It didn't grow its dividend (which currently yields 5.8%) due to headwinds from higher interest rates, a customer merger, and reduced capital spending by major telecom companies.
However, the company believes that continued investment in 5G networks will reaccelerate its growth in the future. Because of that, it expects to be able to deliver on its long-term dividend-growth target after 2025. That will put it in a stronger position to continue being an above-average wealth creator in the future.
Potential millionaire-making stocks
W. P. Carey, NNN REIT, and Crown Castle have all delivered above-average total returns since coming public. While there's no guarantee of future success, all three appear well positioned to continue enriching their investors in the future. Because of that, they look like a great group of REITs to invest in over the coming years for those hoping to reach $1 million by retirement.
