Investing in high-yield dividend stocks is a great way to generate passive income. For example, investing $1,000 in the following companies could yield nearly $60 of annual dividend income:
|
Dividend Stock |
Amount Invested |
Recent Yield |
Annual Dividend Income |
|---|---|---|---|
|
EPR Properties (EPR 0.45%) |
$500 |
6.42% |
$32.10 |
|
Vici Properties (VICI 1.33%) |
$500 |
5.29% |
$26.45 |
|
Total |
$1,000 |
5.85% |
$58.55 |
Data sources: Google Finance and author's calculations. Dividend yields are as of July 31.
Here's a closer look at these high-quality, high-yielding dividend stocks.
EPR Properties
EPR Properties is a real estate investment trust (REIT) focused on experiential real estate. The company owns a diversified portfolio of movie theaters, eat-and-play venues, health and fitness properties, attractions, and other entertainment spaces.
It leases these properties back to operating tenants, primarily under long-term, triple net leases (NNNs). Those leases provide it with very stable cash flow because tenants cover all property operating costs (including routine maintenance, real estate taxes, and building insurance).
Image source: Getty Images.
The REIT expects its stable portfolio to generate $5 to $5.16 per share of funds from operations (FFO) as adjusted this year. That easily covers its monthly dividend payment of $0.295 per share, or $3.54 annually. It also provides a cushion and surplus cash to invest in more experiential properties.
EPR Properties invested $86.3 million into new properties in the first half of this year. Recent investments included acquiring land for $1.2 million and providing $5.9 million in mortgage financing secured by improvements at a health and wellness property in Georgia. It also acquired land for a new eat-and-play property development in Virginia for $1.6 million, which has an expected total cost of $19 million and an anticipated completion in 2026.
The company plans to invest $200 million to $300 million in new properties this year. This includes $106 million for experiential development and redevelopment projects it plans to fund over the next 18 months.
These investments should grow EPR's FFO and dividend. The REIT raised its payout by 3.5% earlier this year.
Vici Properties
Fellow REIT Vici Properties also invests in experiential real estate. However, its primary focus is on market-leading gaming, hospitality, wellness, entertainment, and leisure destinations. For example, it owns several iconic casinos along the Las Vegas Strip, including Caesars Palace Las Vegas, MGM Grand, and the Venetian Resort Las Vegas.
The REIT also leases its properties under long-term NNN contracts with operating tenants. These leases currently have a weighted average remaining term of over 40 years. A growing subset of its leases -- 42% this year, rising to 90% by 2035 -- link rents to inflation. Its strategy of investing in large properties with long-term, inflation-linked leases provides it with stable and rising rental income.
Vici Properties currently pays out $0.4325 per share each quarter in dividends, for a total of $1.73 annually. It produces plenty of cash to cover that payment level -- $2.35 to $2.37 per share of adjusted FFO is expected this year. The REIT uses the cash it retains to invest in additional experiential properties.
The company has secured two notable new investments this year. It has agreed to provide a loan of up to $510 million to fund the development of the North Fork Mono Casino & Resort in California. Additionally, Vici has committed to investing $450 million into a mezzanine loan related to the development of One Beverly Hills, a landmark luxury mixed-use development in California.
Vici's new investments help drive growth in both its FFO per share and its dividend. The REIT has raised its payment for seven straight years (each year since its formation). It has grown the payout at a 7.4% compound annual rate during that period, outpacing the 2.3% average of other REITs focused on properties secured by NNNs.
Excellent ways to generate passive dividend income
EPR Properties and Vici Properties own diversified and growing portfolios of experiential real estate. Those properties provide them with rising streams of rental income to pay dividends and invest in additional properties. That makes them great ways to turn $1,000 into a growing stream of passive dividend income this August.
