Back in 2022 and 2023, many high-yield dividend stocks slumped as rising interest rates drove income-seeking investors toward risk-free CDs and Treasury bills. But in 2024, many of those stocks bounced back as the Federal Reserve cut its benchmark lending rate three times.
The Fed hasn't (yet) reduced the prime lending rate this year, but most analysts anticipate one or two more rate cuts before year-end, depending on various economic factors. If that happens, more investors should pivot back toward high-yielding income plays like real estate investment trusts (REITs).
REITs are publicly traded companies that buy properties, rent them out, and split the rental income with their investors. They must pay out at least 90% of their pre-tax income as dividends to maintain a lower tax rate. The best REITs tend to have high occupancy rates, regularly grow their adjusted funds from operations (FFO) per share, and consistently raise their dividends. Let's take a closer look at three exceptional REITs that check all of those boxes: Vici Properties (VICI -0.88%), Realty Income (O -1.00%), and Stag Industrial (STAG -1.14%). and see why they might make great buy-and-hold candidates for your portfolio.
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1. Vici Properties
Vici is an experiential REIT that owns 93 casinos, resorts, and other entertainment properties across the U.S. and Canada. Its top tenants include Caesar's Entertainment, MGM Resorts, and Penn Entertainment.
Those businesses aren't immune to macro headwinds, but they tend to do all right over the long term and have helped Vici maintain a perfect occupancy rate of 100% ever since its IPO in 2018. It also helps that most Vici leases lock in tenants to multi-decade leases. It also pins most of the lease rates from year to year to the consumer price index (CPI), so it can repeatedly raise rent to keep pace with inflation. The scale and high costs of operating those experiential businesses also make it difficult for those tenants to move.
From 2019 to 2024, Vici's adjusted FFO per share grew at a CAGR of 9%. It expects that figure to rise 4%-6% to $2.35-$2.37 per share in 2025. That will easily cover its forward annual dividend rate of $1.73 per share, which translates to a forward yield of 5.3%. It pays quarterly dividends, and it has raised its payout annually for seven consecutive years. At $33 a share, its stock looks like a bargain, trading at just 14 times this year's adjusted FFO per share.
2. Realty Income
Realty Income is a retail REIT that mainly leases its properties to recession-resistant retailers like convenience stores, discount stores, and drugstores. It leases more than 15,600 properties to over 1,600 clients across the U.S., U.K., and Europe.
Its top tenants include Walgreens, 7-Eleven, and Dollar Tree. Some of those tenants struggled with store closures in recent years, but it's still kept its occupancy rate above 96% ever since its public debut in 1994. That's because its stronger tenants usually pick up the slack for its weaker tenants.
From 2019 to 2024, Realty grew its adjusted FFO per share at a CAGR of 5% -- even as the pandemic, inflation, rising interest rates, and other macro headwinds disrupted the retail industry. For 2025, it expects that figure to grow 1%-2% to $4.24-$4.28 per share.
That should cover its forward annual dividend rate of $3.23 per share, which equals a forward yield of 5.6%. It pays its dividends monthly, and it's raised its payout 131 times since its public debut. At $58 a share, it still looks cheap, trading at 14 times this year's adjusted FFO per share.
3. STAG Industrial
Stag Industrial is an industrial REIT that owns 600 properties across 41 states. Many of its properties are used as e-commerce fulfillment centers, and its biggest tenants include Amazon, FedEx, and XPO. Its occupancy rate has remained in the mid-to-high 90s ever since its IPO in 2011.
STAG benefits from the secular growth of the e-commerce market, which stayed resilient through several economic downturns over the past decade. High switching costs for fulfillment centers keep most of its tenants locked into its leases, which generally last four to five years.
From 2019 to 2024, STAG's core FFO per share grew at a CAGR of 5%. For 2025, analysts expect its core FFO to grow another 5% to $2.51 per share, which will easily cover its forward dividend yield of $1.49. It's raised that payout annually for seven consecutive years. Like Realty Income, STAG pays monthly dividends.
At $34 a share, it pays a forward yield of 4.4% and looks undervalued, trading at 14 times forward earnings. So if you're looking for a straightforward way to earn dividends while passively investing in the e-commerce sector's long-term growth, STAG is a great REIT to buy.
