Historically, dividend stocks have proven to be wise investment choices. Over the past 50 years, they have outperformed non-dividend stocks by more than 2-to-1, based on data from Ned Davis Research and Hartford Funds. Companies that increase their dividends have shown to be particularly effective investments, yielding an average return of 10.2%. This rate can transform a $100 investment into approximately $15,875 over 50 years.
Realty Income (O -0.56%), Invitation Homes (INVH -0.12%), and Rexford Industrial Realty (REXR -0.41%) are notable for their consistent dividend growth. These real estate investment trusts (REITs) offer high dividend yields and impressive growth histories. With their current low share prices, they represent some of the best dividend stocks to invest in for those looking to allocate $100 right now.
An Impressive Growth Record
Realty Income’s recent share price was around $57.50, providing a dividend yield of 5.5% at its current rate. This yield significantly surpasses the S&P 500’s yield of less than 1.5%. Since its public offering in 1994, Realty Income has raised its monthly dividend 131 times, achieving this feat for the last 111 continuous quarters. The REIT maintains a compound annual growth rate of 4.2% for its dividend. This growing payout has led to a substantial total return averaging 13.6% since going public.
Realty Income’s ability to keep increasing its dividend is supported by a low payout ratio (under 75% of its stable cash flow) and one of the top ten balance sheets in the REIT sector. This strong financial position offers significant flexibility for acquiring income-generating properties, ensuring ample opportunity for growth in its $14 trillion target market.
Cashing in on Strong and Growing Rental Demand
As of recently, Invitation Homes had a share price below $34, resulting in a 3.5% dividend yield at its current payment level. Since its 2017 IPO, the REIT has consistently increased its dividend each year, including a 3.6% rise last year. Its focus on single-family rentals in rapidly growing metropolitan areas has led to sector-leading net operating income growth.
Demand for rental properties remains high due to the prohibitive costs of purchasing homes. With a solid financial base, Invitation Homes is well-positioned for ongoing portfolio expansion, including acquiring properties from major homebuilders (over 1,800 homes currently under contract).
Focused Strategy Providing High Dividends
Rexford Industrial Realty’s share price was recently under $37, resulting in a dividend yield of approximately 4.7%. The REIT has seen its dividend grow at a remarkable 16% compound annual rate over the last five years and by 248% throughout the past decade, outpacing the average for the REIT sector.
Focusing exclusively on the Southern California industrial market, Rexford benefits from high demand and limited supply, driving substantial rent growth. With embedded rental increases and a strategy for acquisitions and property enhancements, Rexford is well-positioned to continue its trajectory of dividend growth.
Smart Dividend Growth Stocks
Realty Income, Invitation Homes, and Rexford Industrial Realty all boast impressive dividend growth records. Their solid portfolios, strong financial health, and clear growth opportunities make them prime candidates for investment. As such, they represent some of the top dividend stocks in which to invest $100 today.
Matt DiLallo has positions in Invitation Homes, Realty Income, and Rexford Industrial Realty. The Motley Fool has positions in and recommends Invitation Homes and Realty Income. The Motley Fool has a disclosure policy.
