While benchmark indices like the S&P 500 have been reaching record highs, there are some excellent opportunities to add income to your portfolio. Due to the elevated interest rate environment, many top dividend stocks are trading well below their highs, despite strong results from the businesses themselves. Here are three in particular that are looking attractive as we head into the summer months.
A different kind of casino stock
Vici Properties (NYSE: VICI) spun off of Caesars Entertainment (NASDAQ: CZR) about seven years ago to separate some of the latter’s real estate assets and has already established an impressive track record. In the years since it went public, Vici acquired its largest rival, one of the most impressive properties on the Las Vegas Strip, and has started to branch out to other property types.
On the gaming side, Vici is the largest owner of gaming real estate in Las Vegas, with properties that include Caesars Palace, Mandalay Bay, MGM Grand, The Venetian, and several others. It also owns an impressive collection of regional gaming real estate, including properties such as The Borgata in Atlantic City and MGM National Harbor in D.C. And management is starting to branch out into other opportunities, such as acquiring a portfolio of Bowlero entertainment centers and making several construction loans to property developers.
In short, Vici’s results have been impressive so far, and there’s a massive addressable market of experiential real estate it could pursue. The stock pays a 5.6% dividend yield that is well covered by its cash flow, and management has raised the payout every year since it has been public.
Slow and steady wins the race
Realty Income (NYSE: O) might not sound like the most exciting business. It owns a portfolio of more than 15,000 single-tenant properties, mostly in the retail and service industries, and its tenants sign long-term leases.
And to be fair, the business itself is somewhat boring. I’ve been an investor in Realty Income for more than a decade, and I cannot remember a single time when the company’s earnings results surprised the market. But that’s a good thing. This is a business that is set up to be a long-term compounding machine.
Most Realty Income tenants are in recession-resistant and e-commerce-resistant industries. They sign leases with initial terms of a decade or more, with annual rent increases built in, and they agree to cover the variable costs of property ownership like taxes and insurance.
The proof is in the numbers. Realty Income not only has a 5.8% dividend yield, but it has increased the payout for 107 consecutive quarters. It isn’t just an income play, as smart capital allocation has allowed the company to deliver a 13.6% annualized total return since its 1994 IPO, handily beating the S&P 500.
Take the guesswork out of it
This one isn’t an individual stock at all. If you’re looking for reliable dividend income for many years to come, the Vanguard High Dividend Yield ETF (NYSEMKT: VYM) could be a great fit for you.
This ETF tracks an index of about 550 companies whose stocks have a history of paying above-average dividends. With a median market cap of $126 billion, it focuses on larger (mature) companies, and to give you an idea of what you’re investing in, top holdings of the fund include Broadcom, JPMorgan Chase, ExxonMobil, and Procter & Gamble.
The ETF has a dividend yield of about 2.8% as of this writing, and it’s likely that the dividend income it provides will rise over time. If you don’t want too much exposure to any single stock, this can be a great way to set up worry-free dividend income.
The bottom line is that all three of these are ways to add reliable dividend income to your portfolio. All three of the investments discussed here can be rather volatile over shorter time periods, but the income they produce should be highly reliable.
Should you invest $1,000 in Vici Properties right now?
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Matt Frankel has positions in Realty Income and Vici Properties. The Motley Fool has positions in and recommends JPMorgan Chase, Realty Income, Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF, and Vici Properties. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Want Decades of Passive Income? 3 Stocks to Buy Now and Hold Forever was originally published by The Motley Fool
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