Top Dividend Shares Worth Investing in with a $200 Budget Immediately
Dividend investing isn't a one-size-fits-all approach. Different investors have distinct preferences, and that's why some might find certain high-yield dividend stocks more appealing than others. Let's examine three options: Rexford Industrial, Realty Income, and EPR Properties.
Putting your money where Rexford Industrial's properties are
Rexford Industrial – also known as Rexford Industrial Realty Inc. (REXR) – is a real estate investment trust (REIT) that focuses on purchasing industrial properties. If you're all about geographical narrowness, the Southern California market is where Rexford thrives. Over the past decade, Rexford's dividend has increased at an impressive annual rate of 13%. The current yield is 4.2%, which is near the highest levels in the REIT's history.
So why is the dividend yield so high, and how has the dividend grown so quickly? Wall Street has taken a step back from the industrial property sector following some initial enthusiasm following the coronavirus pandemic. However, Rexford has successfully increased rents at an extraordinary pace due to the still-strong demand and low supply of industrial properties in Southern California.
Invest in Realty Income's slow and steady growth
Comparatively, Realty Income is like a giant tortoise compared to Rexford Industrial's hare. Over the last 30 years, Realty Income has grown its dividend at an impressive annual rate of around 4.3%. Although this rate is relatively slow, it's still higher than the historical rate of inflation growth over time, meaning the purchasing power of the dividend has increased over the years. With a 5.8% dividend yield, Realty Income offers a nearly 40% income boost over Rexford.
Realty Income's primary focus is net lease retail properties. The company requires tenants to pay most property-level operating costs, which is a relatively low-risk approach when spread over a large portfolio. Realty Income is one of the largest net lease REITs with over 15,400 properties, making it a reliable high-yield stock if you're looking for income generation.
Bet on EPR Properties' turnaround
Rexford Industrial's annual dividend growth stretch of just over a decade pales in comparison to Realty Income's 30-year streak. EPR Properties cut its dividend during the coronavirus pandemic but has managed to increase its dividend for three consecutive years now. This might not be the best choice for most investors, but if you enjoy turnaround stories, EPR Properties could still be worth considering.
EPR Properties primarily focuses on experiential assets like amusement parks and movie theaters. This concentration on group settings was a poor choice in a pandemic that spread most easily in gatherings. Consequently, EPR's dividend was cut as the company worked with its tenants to ensure their survival during this challenging period. However, the rent coverage – a tenant's pre-rent operating profits divided by rent – is now better than it was before the pandemic, with a readjusted 2.1x ratio.
Even though EPR Properties still sees substantial challenges in its movie theater portfolio, management is actively addressing these issues. The dividend yield is an impressive 7.3%, and the adjusted funds from operations (FFO) payout ratio was a healthy 66% in the third quarter. If you can stomach some short-term risk for long-term reward, it seems like EPR Properties is making progress with its turnaround.
Diverse dividend investing
Dividend investing is not a one-size-fits-all strategy. Rexford, Realty Income, and EPR Properties each cater to different investor preferences, whether it's impressive growth, reliable income, or the thrill of a turnaround story. In the end, the best high-yield dividend stock for you is the one that aligns with your investment strategy and risk tolerance.
If you're interested in high-yield dividends and prefer a stable income source, Realty Income's dividend growth over the past 30 years might appeal to you, especially considering its yield of 5.8%, offering a significant income boost compared to Rexford's.
Investors looking for geographical narrowness might find Rexford Industrial's focus on purchasing industrial properties in the Southern California market attractive, as its dividend has grown impressively over the past decade, reaching a current yield of 4.2%.
