This year's stock market volatility has put a lot of stocks down by double digits. Income stocks' inverse relationship with yield and pricing means right now is a fantastic time to buy and hold great income stocks until your retirement years.
Real estate investment trusts (REITs) are some of the best dividend stocks to own for retirement because they are required to pay 90% or more of taxable income in the form of dividends. This means their yield is often higher and more reliable than other dividend-paying stocks while having a long track record of dividend increases.
If you have money to invest today, here's why you should consider Digital Realty Trust (DLR 0.95%), National Retail Properties (NNN -0.66%), and Prologis (PLD 0.69%).
A value buy in a fast-growing industry
Digital Realty Trust is one of the leading data center operators in the world, with over 300 facilities in 26 countries. Data storage is becoming an increasingly important aspect of our society. Everything from streaming your favorite TV show, posting a picture on social media, browsing the web, or recording an online meeting all relies on data centers to operate efficiently.
Digital Realty Trust leases around $45 billion worth of space to tenants across a wide range of industries. The REIT has done a wonderful job over the years growing its business through strategic acquisitions and expansions into new territories, the latest of which was Terraco, a South African-based data center company.
In turn, it's grown its funds from operations (FFO), a key metric that illustrates a REITs profitability, by nearly 300% since its IPO in 2004. The REIT has also grown its dividend by more than 680% during that time while maintaining 17 years of consecutive dividend increases.
The stock has fallen 34% this year, pushing its dividend yield to 3.39% today.
Digital Realty Trust's latest third-quarter earnings from 2022 saw a record number of bookings, or new leases, for its data center services, a sign that demand for data center space is only growing. Considering the high barriers to entry in this space, investing in a reputable company like Digital Realty Trust today is a surefire play for income in your retirement years.
38 years of dividend increases in a super-reliable industry
National Retail Properties is a net lease REIT that owns and leases single-tenant retail properties -- over 3,300 roughly. Net lease real estate is one of the most reliable business models in the real estate industry because it passes most maintenance responsibilities on to the tenants over super-long lease terms. This creates steady income for the landlord with low overhead.
National Retail Properties has been in operation for nearly four decades. During that time, the company maintained consistent growth while growing its dividends steadily. National Retail Properties has raised its dividend 33 years in a row.
The company's portfolio is nearly 100% occupied, and it's well diversified, leasing to nearly every type of tenant possible within the retail industry.
Unlike most REITs, National Retail Properties isn't down this year. Investors have taken note of its impressive track record and reliable income, pushing its share price up to almost 5% this past year. Even with a slightly elevated share price, the stock still pays an attractive 4.7% dividend yield, which is over four times higher than the S&P 500.
This pure-play industrial REIT is on major sale
It's not often you can purchase the most popular, sought-after stocks on sale. Big-name companies that dominate the market usually trade at a premium when the market is up or down. But this year's market volatility has put Prologis, the world's largest industrial operator, on sale.
Prologis owns and leases roughly 1 billion square feet of industrial warehouses, distribution centers, and logistics facilities across four continents. It serves every part of the industrial industry, from manufacturing to transportation, third-party logistics, direct-to-consumer retail, and wholesale retail.
The company has achieved tremendous, rapid growth over the past decade, growing its portfolio by 76% and its FFO by 445%. However, concern over inflation's impact on retail spending and premium pricing at the start of 2022 has sent the stock down 26% this past year. Its yield in return is now over 2%.
Prologis boasts an A credit rating and conservative balance sheet while raising its dividends for the past eight years in a row. Given its robust growth as of late and red-hot demand for industrial properties in the market today, buying Prologis while it's on sale could prove rewarding.
I personally am loading up on income stocks, with the plan to hold them for many decades to come. While any investment amount would do for buying shares in these stocks, a $5,000 even split could go a long way in terms of income-producing abilities and long-term growth opportunities.
