Market volatility is hardest on those in or nearing retirement. Right now the market is down, taking loads of retirement savings with it. Saving and investing is an important part of a retirement plan, but so is having steady income streams, like dividend income, to supplement your savings.
Dividend stocks have provided investors with dependable income for decades. Many of the most reputable dividend stocks not only provide long-term growth opportunities through share price appreciation but they are also known to raise their dividends periodically.
Each time a dividend is increased, your income and return grow with it, meaning a small investment today could yield big results later. If you're looking for reliable dividend stocks that can help support you as you near retirement, here's why you should consider buying three of the most esteemed dividend stocks, Realty Income (O +0.91%), W.P. Carey (WPC +1.37%), and Agree Realty (ADC +0.55%).
O Dividend Yield data by YCharts
1. Realty Income: The Dividend Aristocrat
Aside from being the largest net lease real estate investment trust (REIT) in the industry, Realty Income is also a Dividend Aristocrat, a title that's given to stocks in the S&P 500 that have maintained 25 years or more of consistent dividend increases. Since 1994, Realty Income has increased its dividend yield at a compounded rate of 4.4% for a total of 117 increases. Plus the REIT pays its dividends monthly.
NYSE: O
Key Data Points
Realty Income owns and leases over 11,400 different real estate properties in the U.S., Puerto Rico, the U.K., and Spain. Its specialty is single-tenant retail real estate; however, the company is diversifying its holdings by adding a hotel and casino as well as industrial real estate and other commercial properties to its portfolio.
The net lease business is rather boring, but it is a super-dependable model for achieving steady long-term growth. Net leases pass most of the property expenses onto the tenant through long-term leases of 10 years or longer. This means the company has low overhead and steady income with incremental increases built into its leases.
Being in operation for decades means the company has been through recessions and volatility before. Since its initial public offering 28 years ago, it has managed to increase earnings per share (EPS) every year except one. While it's certainly not immune to economic challenges, it does have a grade A balance sheet that can help it overcome any inflationary or recessionary impacts soon to come.
The REIT's dividend yield of about 4.5% is safe given the size and diversity of its income streams plus its moderate payout ratio of 73%. Meaning investors can rest easy that the monthly income should keep coming.
2. W.P. Carey: 24 years of dividend raises and counting
W.P. Carey is a diversified REIT that owns and leases a variety of properties such as office space, retail property, industrial warehouses, and self-storage facilities on long-term net leases. Its diverse portfolio of over 1,350 properties is one of the reasons the company is so appealing. It allows the company to minimize its risk exposure during market downturns and benefit from the upside of market opportunities.
NYSE: WPC
Key Data Points
The company has an incredible track record of growth, having grown its funds from operations (FFO), a metric for REITs that is comparable to earnings per share, by 113% over the last 10 years. Plus it raised its dividend for 24 consecutive years while providing a nearly 13% annualized return over the last 25 years. Right now its occupancy is 99.1%, which isn't out of the norm for the company. Since 2009, its occupancy has never fallen below 96%.
Investors certainly shouldn't expect stellar growth with this company, but they can rely on W.P. Carey for consistent income. Today's 5% dividend yield has ample coverage with its payout ratio at 81%.
3. Agree Realty: A monthly net lease REIT
Realty Income isn't the only monthly paying dividend REIT investors can rely on in their retirement years. Agree Realty, an under-the-radar retail REIT with an equally reputable track record, made the switch to monthly dividends in 2021.
Like the other dividend payers on the list, Realty Income is a net lease REIT, renting its roughly 1,600 retail properties to investment-grade tenants like Walmart, Tractor Supply, Dollar General, and Best Buy, among many others.
NYSE: ADC
Key Data Points
The company has made major expansionary efforts over the past few years, spending $4.8 billion to grow its portfolio since 2018. This has helped the company boost its earnings, including its FFO by 38%. The company raised its dividend payout by 8.7% this year, bringing its dividend yield to roughly 3.8% at the time of the writing. It also has a track record of 17 years of consistent dividend increases.
Income stability and growth you want for retirement
All three stocks have proven the test of time providing reliable income and strong growth for years, making them ideal buys for a retirement portfolio. Just remember the longer you own the stock, the greater your earnings will likely be. In the case of Realty Income, W.P. Carey, and Agree Realty, dividend growth happens yearly, so buying now, even if retirement is a ways away, could pay off well.
