With the S&P 500 recently achieving record levels, investors searching for promising opportunities for their retirement accounts face a unique challenge. Yet, in the midst of the stock market’s remarkable ascent, three real estate dividend stocks emerge as potential hidden treasures. Agree Realty (ADC), Alexandria Real Estate Equities (ARE), and VICI Properties (VICI) have all demonstrated remarkable resilience and promise both growth and income potential in these uncertain times.
These three stocks are publicly traded real estate investment trusts (REITs) that have consistently paid out at least 90% of their taxable income as dividends. While this commitment to dividend payouts can make them sensitive to rising interest rates, a shift in the economic landscape is expected to favor them in the coming year.
Agree Realty – A Stable Performer
Agree Realty, a highly respected retail REIT, possesses a diversified portfolio of around 2,100 properties spread across 49 states. Notably, roughly 70% of its rental income comes from investment-grade tenants, solidifying its financial stability. In 2023 alone, Agree Realty added 319 properties to its portfolio, underscoring its growth potential. With its stock currently trading at around $60.11 and analysts forecasting a consensus target price of $68.44, there’s a potential upside of 13%. Furthermore, the company has consistently increased its dividend by an average of 6.67% annually over the past three years.
Alexandria Real Estate Equities – A Distinctive Player
Alexandria Real Estate Equities, although facing challenges in the office space sector due to the impact of COVID-19 and the rise of remote work, stands out for its unique focus. Specializing in life sciences space in major research and development clusters in coastal markets, the company’s tenant base includes major biopharma, university, and government entities. Trading at approximately $122 per share, with a consensus price target of $143.11, Alexandria offers an impressive 18% upside potential. Furthermore, it has a remarkable track record of 14 consecutive years of annual dividend increases, with an average annualized growth rate of 5.4% over the past three years.
Vici Properties – The Newcomer with Deep Roots
Vici Properties, the newest of the trio, boasts a diverse portfolio that includes 54 casinos, 39 experiential properties, championship golf courses, restaurants, and over 60,000 hotel rooms in the United States and Canada. Despite its recent entry into the market, analysts foresee a 14% upside for Vici stock, with a targeted consensus price of $35.15. Currently trading at around $31 per share, the company has consistently increased its dividend every year during its five years in business, with an annualized growth rate of approximately 8.7% over the past three years.
Unlocking Retirement Potential
For retirees and income-focused investors, the allure of these REITs is amplified by their current dividend yields, which range from 4% to 5%. As the chart illustrates, these three REITs have consistently outperformed the S&P 500 in terms of yield, providing a reliable source of income. However, they also present the potential for growth, a crucial consideration in the face of persistent inflation concerns. As the market continues to ride the bullish wave, Agree Realty, Alexandria Real Estate Equities, and Vici Properties remain attractive additions to retirement portfolios, offering a balanced blend of income and growth opportunities.