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Dividend investing often takes a back seat when the market is focused on tech growth stocks, especially today when AI drives much of the market hype. But hype does not last long and long-term investors should prefer solid income-generating stocks for good times and dry spells. The performance of dividend stocks is best understood over long-term horizons. According to a report from Richard C. Young Investment Advisors, dividends and reinvested dividends have accounted for about 60% of the S&P 500’s total return over the past 40 years through 2022.
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A few months ago, a dividend investor shared his detailed income report on the r/Dividends community on Reddit, saying he earns about $5,300 a month in dividend income. According to the portfolio screenshots shared by the investor, his total portfolio was worth roughly $880,368. He said it took about one year to go from $4,000 to $5,300 in monthly dividend income.
Someone asked the investor how he chose dividend stocks for investing. Here is what he said:
“Mainly the following:
Is the yield over 3%?
Is the dividend Growth at least over 3-4% to keep up with inflation?
What is the stock price over the past five years? Going up, down or plateau?
Is the brand power strong?
Is this what the majority of people need? (Such as EPD or ENB where everyone pretty much needs energy.)”
The investor was also asked to share his advice for beginner investors.
“If you are not sure where to start, then I always recommend starting with VOO and QQQM. You cant go wrong with these two combination. Give yourself some time to watch the market and start investing in individual stocks.”
Arbor Realty Trust Inc. (NYSE:ABR) was among the investor’s biggest holdings, earning $5,300 per month in dividends. The portfolio screenshots showed he owned 2,020 shares of the company, raking in $3,650 annually. Arbor Realty is a mortgage REIT with a dividend yield of over 11%.
Medical Properties Trust
Medical Properties Trust Inc. (NYSE:MPW) is a healthcare-focused REIT that acquires and develops net-leased hospital facilities. It’s among the top high-yield REITs in the portfolio of the investor, earning $5,300 per month in dividend income. MPW has a yield of over 6.5%. MPW shares are up 5% so far this year.
The Redditor had about 6,437 shares of Medical Properties Trust in his portfolio, generating $3,862 in annual dividend income.
Realty Income
Realty Income was among the Redditor’s biggest positions, earning $5,300 per month in dividends. He owned about 829 shares of the monthly dividend stock. Realty Income yields over 5% and has raised dividends for 30 consecutive years. Analysts believe Realty Income Corp (NYSE:O) has better days ahead as its tenants include retailers who will see more foot traffic amid a decline in inflation and interest rate cuts. Earlier this month, Mizuho Securities affirmed its Outperform rating on the stock with a $64 price target.
Stag Industrial Stag Industrial (NYSE:STAG) is an industrial REIT that pays monthly dividends. Its dividend yield is about 3.8%. The stock made up a negligible part of the Redditor’s portfolio. STAG shares are up 14% so far this year.
VICI Properties
VICI Properties Inc. (NYSE:VICI) was another high-yield REIT stock in the investor’s portfolio earning $5,300 a month in dividend income. New York-based VICI Properties Inc. (NYSE:VICI) is a real estate investment trust focusing on casinos, entertainment and hospitality facilities. The company owns some of the world’s most famous entertainment properties, including Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas. VICI has a dividend yield of about 5.2%.
WP Carey Inc
With a dividend yield of 5.8%, WP Carey Inc (NYSE:WPC) is among the top net lease REITs with over 1,200 properties in the U.S., Europe and other parts of the world. Retail stores, restaurants, automotive companies and grocery stores are among the REIT’s tenants. The Redditor earning $5,300 per month in dividend income had just 126 shares of the company in his portfolio.
The current interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through publicly-traded REITs.
Arrived Homes, the Jeff Bezos-backed investment platform, has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in August. The best part? Unlike other private credit funds, this one has a minimum investment of only $100.
Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.
