High-yield dividend stocks can help you maximize the income generated from every dollar you invest. For example, the average dividend stock has a yield of around 1.2% (using the S&P 500's dividend yield as a benchmark). Every $100 invested at that rate would produce about $1.20 of dividend income each year. For comparison, a stock with a 5% yield would generate $5 of annual dividend income.
There are lots of great high-yielding dividend stocks to choose from these days. EPR Properties (EPR +0.62%), NNN REIT (NNN +0.20%), and Stag Industrial (STAG +0.74%) are great options for those who have a little bit of cash to invest. Here's why they're no-brainer buys for income.
An exciting income stream
NYSE: EPR
Key Data Points
EPR Properties is a real estate investment trust (REIT) focused on owning experiential properties, like movie theaters, eat-and-play venues, and other attractions. It leases those properties to companies that operate the experience. Those leases provide it with relatively stable rental income, which it uses to pay dividends and invest in new experiential properties.
The REIT pays a monthly dividend that currently yields around 7%. It could turn every $100 invested into its stock into a $7.00 annual income stream at that rate.
EPR Properties uses the cash it retains after paying dividends, non-core property sales, and its strong balance sheet to invest in additional income-generating experiential properties. The REIT estimates it can invest $200 million to $300 million annually without needing to sell additional stock. That investment level should drive about 3% to 4% annual growth in its adjusted funds from operations (FFO). That growing cash flow should support a similar annual rise in its dividend (the REIT raised its payout by 3.6% last year). EPR already has about $150 million of experiential development and redevelopment projects lined up that it expects to fund over the next two years, which gives it solid visibility into its future growth prospects.
As steady as they come
NYSE: NNN
Key Data Points
NNN REIT has a very simple strategy. It only invests in single-tenant net lease retail properties, like restaurants, convenience stores, and car washes. That lease structure requires tenants to cover all operating costs, including routine maintenance, real estate taxes, and building insurance. Because of that, it generates very stable cash flow to cover its high-yielding dividend (5.7% current yield).
The REIT has a phenomenal record of increasing its dividend. Last year was the 35th straight year that it increased its payment. It's one of only three publicly traded REITs to reach that milestone.
NNN REIT uses its post-dividend free cash flow, non-core property sales, and strong balance sheet to continue acquiring income-generating retail properties. The REIT primarily purchases properties through existing tenant relationships via sale-leaseback transactions (73% of its acquisition volume since 2007). That strategy provides its tenants with capital to continue expanding their retail footprints, which then supplies NNN REIT with additional acquisition opportunities. Last year, the REIT invested $560 million into new properties, and it has significant liquidity to spend even more this year.
A very stable income stream
NYSE: STAG
Key Data Points
Stag Industrial is a REIT focused on owning industrial properties, like warehouses and light manufacturing facilities. It signs long-term leases with tenants that generate very stable rental income. That enables the company to pay an attractive monthly dividend that currently yields 4.3%. The REIT has increased its dividend payment every single year since it came public in 2011.
Industrial real estate is in high demand these days due to trends like the rising adoption of e-commerce and the onshoring of manufacturing. Because of that, market rents are rising faster than the escalation clauses in the REIT's existing leases. That's enabling it to sign new leases at much higher rates when the legacy ones expire. For example, rents on leases that commenced last year were 19.4% higher than the prior rates.
Stag Industrial also has a lot of financial flexibility to continue expanding its portfolio. Last year, the REIT bought 32 buildings for $682 million. It expects to invest between $350 million and $650 million into new properties this year. It should have no trouble reaching that target, considering it's currently evaluating 180 building acquisition opportunities representing $3.7 billion of investment potential. The REIT's growing portfolio and rising rental income should enable it to continue increasing its dividend.
Rock-solid income streams
REITs like EPR Properties, NNN REIT, and Stag Industrial generate very stable rental income. That allows them to pay high-yielding dividends. Because of that, they're no-brainer stocks for those seeking to turn a little bit of idle cash into a more lucrative passive income stream.
