The average real estate investment trust (REIT) has a yield of around 4%. You can do much better than that with investments in Realty Income (O +1.06%), Vici Properties (VICI +0.82%), and Rexford Industrial (REXR +0.67%). The risk rises with each of these companies, but so does the potential for dividend growth. Here's a quick look at why it could be a no-brainer decision to buy each one right now.
1. Realty Income is a boring and reliable dividend stock
Of these three REITs, Realty Income is by far the least exciting. It owns single-tenant properties for which the tenant is responsible for most property-level expenses (also known as a net lease). Around 75% of its rents come from retail assets, which tend to be very similar and, thus, easy to buy, sell, and release as needed. With over 15,600 properties spread across the United States and Europe, there's a lot of diversification in the portfolio.
NYSE: O
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Size, however, is both a benefit and a problem here. While Realty Income's scale is a key factor in its reliability (it has increased its dividend annually for three decades), it also means that slow growth is the norm. The well-above-REIT-average yield of 5.6% is partly a function of this fact. However, if dividend consistency is important to you, it's hard to beat this boring REIT. As an added bonus, Realty pays out the dividend monthly; so it's almost like a paycheck replacement for those who are retired.
2. Vici Properties owns the most vital asset in the casino sector
Suggesting that a casino business is low-risk should seem like an odd statement. Indeed, casino operators tend to see their financial performance track along with economic swings. But Vici Properties owns casinos -- it doesn't operate them. Casino operators need to have access to the casino property they occupy if they want to remain in business. Thus, paying the rent is a top priority. The proof of that is that Vici Properties sailed through the coronavirus pandemic period, actually increasing its dividend, despite the fact that casinos were shut down because they were deemed non-essential businesses.
NYSE: VICI
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To be fair, Vici Properties is higher-risk than Realty Income. But there's an offset. While Realty Income's dividend has grown at a roughly 4% annualized rate over time, Vici Properties' dividend has been expanding at around 7% a year, on average. So while the buying power of Realty Income's dividend has kept pace with inflation, the buying power of Vici Properties' dividend has increased notably, and Vici Properties' yield is a still-attractive 5.4%.
3. Rexford has gone all in and rewarded investors with dividend growth
Given the current state of geopolitics and tariffs, investors might be a little leery of a warehouse landlord. The concern will probably increase for a warehouse owner that is focused on just one region. This is, in a nutshell, the description of Rexford Industrial, which only owns warehouses in Southern California. The negative view of the business has pushed the yield up to a historically high 5.2%. That's an opportunity for investors who think long term.
NYSE: REXR
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Southern California is one of the largest warehouse markets in the world. It has a long history of being supply constrained, and it's a vital gateway from Asia into the United States, which remains true despite the current tariff kerfuffle. As one of the largest players in the area and a public REIT, Rexford can be more aggressive with its acquisitions. The REIT has strong redevelopment skills, as well, allowing it to buy older assets and upgrade them so it can charge more rent.
What's most exciting about Rexford is that its regional focus and business skill set have resulted in over a decade of dividend growth, with an annualized dividend growth rate of more than 10% a year over the past 10 years. There's more risk here, but there's also more dividend growth reward.
These no-brainer high-yield REITs are ready for you to buy them
For conservative investors, Realty Income will probably be the dividend stock of choice here. Those willing to take on a little more risk to get more rapid dividend growth will probably prefer Vici Properties and its casino tenants. Dividend investors who are willing to take a contrarian stance should look at Rexford Industrial and its rapidly expanding dividend. All three have above-industry-average yields and strong businesses backing the income streams they provide to their shareholders.
