Led by the return to favor of front-running growth stocks, the S&P 500 has once again hit record levels. That's good news, but it can also make it more challenging to identify good positions to take at this point.
From a retirement point of view, there are still plenty of good options for those seeking growth and income, including some real estate dividend stocks that have yet to fully take part in the newly emerged bull market.
Three favorites of mine are Agree Realty (ADC 0.88%), Alexandria Real Estate Equities (ARE 2.39%), and VICI Properties (VICI 1.11%).
The above chart illustrates how far off their highs each of these stocks remain, going back to February 2018 when Vici Properties went public as a spinoff of Caesars Entertainment. The Vanguard S&P 500 ETF is included as a benchmark.
Each of these are publicly traded real estate investment trusts (REITs). Tax law requires them to pay out at least 90% of their taxable income as dividends, meaning they don't retain a great deal of cash and must finance the bulk of their portfolio growth.
That makes them particularly allergic to rising interest rates, especially when they're vying against the likes of bonds. But that screw is expected to begin to turn the other way this year, and these three REITs should be among those returning even more quickly to favor.
That's why I'm adding to their positions as passive-income providers with a side of growth in my retirement portfolio.
1. Agree Realty
Agree Realty is a highly regarded retail REIT that currently owns a portfolio of about 2,100 properties in 49 states. About 70% of its rent comes from investment-grade tenants, and its rock-solid balance sheet enablrd it to continue growing, including adding 319 properties in 2023 alone.
NYSE: ADC
Key Data Points
Agree stock currently sells for about $60.11 and analysts give it a consensus target price of $68.44, a nice upside of about 13%. The suburban Detroit company has also raised its dividend by an average of 6.67% a year over the past three years, including six tiny jumps since it began paying monthly in January 2021.
2. Alexandria Real Estate Equities
Alexandria Real Estate Equities suffers from guilt by association. It's an office REIT that's now trading nearly 45% off its five-year high as office space in general is suffering from the long effects of COVID-19 and the working-from-home revolution.
But Alexandria is not like other office REITs. It owns and operates life sciences space in major research and development clusters in desirable coastal markets, and its rent rolls are anchored by major biopharma, university, and government tenants whose staff can't be expected to do critical laboratory work largely at home.
NYSE: ARE
Key Data Points
Alexandria stock is currently selling for about $122 and its consensus price target of $143.11 represents an upside of nearly 18%. The San Diego-based REIT also is riding a 14-year streak of annual dividend increases and has bumped the payout an annualized 5.4% a year over the past three years.
3. Vici Properties
Vici Properties is by far the newest of these operations (Agree and Alexandria have both been public companies for about 30 years) but it has deep roots in some of mankind's most venerable pursuits.
Vici counts Caesars Palace, MGM Grand, and the Venetian Resort in Las Vegas among the 54 casinos and 39 other experiential properties -- including four championship golf courses, several hundred restaurants, and about 60,000 hotel rooms -- it owns across the U.S. and Canada.
NYSE: VICI
Key Data Points
Analysts currently see about a 14% upside for Vici stock, with a targeted consensus price of $35.15. It currently trades for about $31 a share and has raised its dividend every year for the five years it's been in business, including by about 8.7% a year for the past three.
Growing yield while catching the bulls
ADC Dividend Yield data by YCharts
Each of these REITs also currently yields between 4% and 5%. As a retiree, I'm interested in income nearly as much as growth right now, and the chart above shows how consistently these three REITs have outpaced the S&P 500 by that measure.
Of course, growth matters, too, since inflation is likely to remain an issue, and all of these REITs also have enough potential to keep growing both their payouts and their share price in the coming years, which is why I'm adding to my stake in each of these even as the market once more chases the bulls.
