Dividend Investing Strategies: REITs to Buy November 2024 I NNN REIT I CubeSmart I WP Carey

Summary

In this video, Dark Dividend discusses three top Real Estate Investment Trusts (REITs) to consider for passive income: NNN, WP Carey, and Cubesmart. He shares his insights as an income and dividend growth investor, emphasizing the importance of steady revenue trends, high occupancy rates, and reliable dividends. NNN offers a 5.35% dividend yield, WP Carey provides a 6.35% yield, and Cubesmart stands out with 12.63% dividend growth over the last five years. Dark Dividend highlights why these REITs are strong picks for anyone seeking dependable passive income in November 2024 and beyond.

Takeaways

• 😀 REITs (Real Estate Investment Trusts) are ideal for income investors who seek passive income through dividends.
• 😀 The key metrics to focus on when evaluating REITs are occupancy rate, funds from operations (FFO), and revenue trends.
• 😀 REITs are taxed as regular income, meaning investors don’t receive dividend deductions, which can be a downside for some.
• 😀 NNN REIT offers a 5.35% dividend yield, with a high occupancy rate of 99.3% and consistent revenue growth from $393M in 2013 to $848M in 2023.
• 😀 WP Carey (WPC) is a diversified REIT with 1,430 properties and a strong geographical presence, with revenue increasing from $908M in 2014 to $1.74B in 2023.
• 😀 WP Carey’s dividend history shows steady growth, with a quarterly dividend of $1.07 in 2023 and a 5-year dividend growth rate of 20%.
• 😀 Cub Smart is a self-storage REIT with 600+ properties in 24 states and an impressive dividend growth rate of 12.63% over the past 5 years.
• 😀 Cub Smart’s revenue growth from $376M in 2014 to $1.05B in 2023 highlights its strong performance and expanding market share.
• 😀 The creator prioritizes dividend growth and reinvesting dividends to acquire more shares of high-yield REITs for long-term wealth building.
• 😀 The creator emphasizes the importance of focusing on reliable, long-term revenue trends and high occupancy rates when selecting REITs for income generation.
• 😀 The creator’s investment strategy involves balancing income-focused REITs with dividend growth stocks, maintaining a diversified portfolio for consistent returns.

Q & A

What is a Real Estate Investment Trust (REIT)?

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances real estate that produces income. REITs typically own a portfolio of properties and are required to distribute at least 90% of their taxable income to shareholders as dividends, making them a popular choice for income-focused investors.

Why does the speaker invest in REITs?

The speaker invests in REITs because they provide passive income through dividends, which is central to their investment strategy. The speaker prefers the income now, and REITs offer reliable and often predictable dividend payouts, which fit their hybrid investment approach.

What is the importance of Funds From Operations (FFO) in REITs?

FFO is a key metric for evaluating the performance of REITs, as it measures the cash generated by the REIT's operations. It excludes depreciation and other non-cash items, providing a clearer picture of the REIT’s ability to generate income and sustain its dividend payouts.

What are the risks associated with REITs, according to the speaker?

The speaker mentions that REITs are subject to taxes, as the income generated is taxed as regular income rather than receiving tax deductions like other forms of investment. Additionally, REITs don't offer the same growth potential as some other stocks, and the dividend growth may not always be substantial.

Why is the speaker attracted to NNN REIT?

The speaker is attracted to NNN REIT because of its high dividend yield (5.35%), solid occupancy rate (99.3%), and consistent revenue growth. The speaker values its reliability and the ability to provide passive income through dividends, despite NNN not outperforming the S&P 500 at the moment.

What does the speaker look for in a REIT's financials before investing?

The speaker looks for strong revenue trends, high occupancy rates, and stable or growing Funds From Operations (FFO). These factors indicate the REIT's ability to generate reliable income, which is essential for long-term passive income investors.

How does the speaker feel about WP Carey (WPC)?

The speaker likes WP Carey for its diversified portfolio, consistent occupancy rate, and high-quality tenants. They find the company attractive for its long-term stability and income-generating potential, despite its slight struggles post-pandemic. The speaker appreciates the company's focus on industrial and retail properties over office spaces.

What has been WP Carey’s revenue growth trend?

WP Carey's revenue has grown steadily from $489 million in 2014 to $1.74 billion in 2023, demonstrating the company’s ability to increase its earnings over time. This growth was particularly strong after 2019, and the company managed to maintain high occupancy rates and strong rent escalations even during challenging times.

How has Cub Smart (Self-Storage REIT) performed compared to other REITs mentioned?

Cub Smart has been performing exceptionally well, with a significant revenue increase from $376 million in 2014 to $1.05 billion in 2023. Additionally, it has impressive dividend growth, with a 12.63% increase in dividends over the past 5 years. The speaker views Cub Smart as a particularly strong performer, both in terms of revenue and dividend growth.

What is the dividend growth rate of Cub Smart in the last 5 years?

Cub Smart's dividend growth rate over the last 5 years is an impressive 12.63%. The quarterly dividend has grown from 16 cents per share in 2015 to 51 cents per share in 2023, showcasing the company’s strong ability to increase payouts to shareholders.

What is the speaker's overall strategy when investing in REITs?

The speaker’s strategy is to invest in REITs that provide reliable passive income and steady dividend growth. They focus on income now, reinvesting dividends to purchase more shares, and holding for long-term growth. The speaker favors REITs with high occupancy rates, consistent revenue growth, and stable or growing dividends.