Last year was tough for investors. The Dow Jones Industrial Average fell 28% from its high and the S&P 500 index declined 20%. Losses may have been deep and broad but history has shown that the market eventually will recover. No one knows exactly when the bear market will come to an end, but smart investors know now is the time to take advantage of bargain pricing.
Three stocks that look particularly appealing considering their high-dividend yields and beaten-up share prices are Blackstone (BX -2.61%), UMH Properties (UMH -0.56%), and Mid-America Apartment Communities (MAA -0.62%). All three stocks declined 20% or more in the past year while paying yields ranging from 3% to 5%.
Here's a closer look at each company and why three Motley Fool contributors believe these fantastic dividend stocks are must-buys now.
Blackstone has supercharged growth and a high dividend yield
Liz Brumer-Smith (Blackstone): Blackstone is one of the leading alternative asset-management companies in the world. Managing more than $975 billion, the company invests money for wealthy individuals and institutional clients in assets and industries like real estate, debt, life sciences, private equity, and infrastructure.
Over the past decade, global alternative assets under management has grown at a clip of nearly 14% per year on a compounded annual basis. Investors and large investment firms have become increasingly attracted to the diversification and superior yields alternatives can offer, particularly in a highly volatile economy. That has helped Blackstone achieve supercharged growth.
Since 2013, Blackstone has provided a 743% total return, 2.5 times more than the S&P 500 during that time and nearly triple its closest competitors in the alternative-assets industry. And this growth isn't something I see stopping anytime soon. Alternative assets are a challenging investment avenue for everyday investors to branch into. High barriers to entry and extremely specialized knowledge make it much easier to invest your money with a company like Blackstone than do it yourself. Some experts estimate the alternative-assets market could double during the next five years, meaning Blackstone's growth could easily continue.
Amid the slowing real estate market, high inflation, and redemption requests in BREIT, its private real estate investment trust (REIT), investors sent the stock down 25% during the past year. However, its latest full-year earnings show demand for its services isn't slowing. Investors are pouring money into Blackstone, consistently boosting its assets under management (AUM) by double-digit percentage amounts. In 2022, AUM jumped by 11% while AUM grew by 42% from 2020 to 2021.
The company has a superb financial profile and an experienced management team prepared for all-weather investing. And its attractive dividend yield of almost 5% make it a no-brainer buy before the bear market ends.
UMH creates its own opportunities
Kristi Waterworth (UMH Properties): As winter slowly turns to spring, everything seems to be thawing a bit, even the market. But now is still a great time to get some awesome deals on dividend stocks before the bear market truly ends.
One of my longtime favorites is the residential real estate investment trust (REIT) UMH Properties, partially because I feel like it has a great deal of potential with some of its new initiatives, and partially because I know it offers a huge value to its tenants compared to other owners of rental housing. That makes me feel good about its efforts to keep housing affordable.
When times are tough, renters stay where they can afford to live. The average rent of a UMH home is $854 across its growing portfolio, versus the average rent reported by Rent.com in January 2023 of $1,942, It's kind of a no-brainer where people will choose to live.
As UMH expands, it's finding more renters to help it grow. As of early February 2023 reporting, it had a whopping 25,700 sites for homes and 9,000 rental units. Some of those sites will be filled eventually with a home and an occupant, but the land itself will continue to generate rental income. The company intends to add even more sites and homes in the coming year, either on parts of its 2,066 vacant acres or through additional acquisitions.
The coming years bring a different sort of investment path to UMH's already excellent track record, with the addition of the UMH OZ Fund, which is designed to give UMH more access to "Opportunity Zones." This theoretically gives the company the opportunity to do exactly what it already does, but with significant tax benefits and access to inexpensive capital for further development, despite higher interest rates.
Owing to another successful year, UMH again increased its quarterly stock dividend for 2023, to $0.205 per share, from $0.20 per share throughout 2022. This is a 2.5% increase year over year, on top of a 4.75% dividend yield.
For these reasons and many more, I remain a UMH enthusiast. It's definitely a stock I would buy more of before the spring thaw finally comes and pushes prices upward and dividend yields down.
Mid-America Apartment offers good reasons to buy
Marc Rapport (Mid-America Apartment Communities): It's time to strike when the iron is hot, or in this case, when the market's a bit cold.
A good candidate for consideration right now is one of America's largest apartment landlords. Mid-America Apartment Communities, which goes by MAA, is a (REIT) with a portfolio of about 300 apartment communities and close to 102,000 units focused on the Sun Belt and southeastern U.S.
These metros areas -- including Dallas, Houston and Austin in Texas; Charlotte, North Carolina; Orlando and Tampa in Florida; Nashville, Tennessee; and Charleston, South Carolina -- boast some of the fastest job and population growth rates in the country, which means people with jobs who need a place to live and can pay the rent.
Residential REITs were among the many property owners able to quickly increase rents during the pandemic as demand spiked in many desirable markets. But these companies also took a big hit last year amid concerns about slowing rental rate hikes and broader market concerns about inflation and rising interest rates.
MAA was not immune, of course, and its downturn could well represent a nice opportunity to buy. Remember, this is a dividend stock, and much of its value depends on its ability to increase payouts. The chart below shows how well this Memphis, Tennessee-based REIT has increased its dividend and its funds from operations (FFO) per share. The latter is a key measure for assessing a REIT's capacity for supporting and raising dividends.
Also included here is the stock's price during the same 10 years. Analysts who follow MAA give it an average target price of $180.54. That's not the biggest targeted upside around -- and the yield at about 3.3% is not the highest you'll ever see.
But this is from a company that has paid 115 straight quarterly cash dividends since going public 28 years ago and continues to have a rock-solid balance sheet. MAA just continues to present reasons to buy for regular income and slow but steady share price growth.
