Three High-Yielding Dividend Shares with a Return of Over 3% Worth Considering Immediately
The yield on the S&P 500 recently plunged to its lowest point in two decades, hovering around 1.2%. This is significantly lower than its peak of over 4% post-financial crisis. The low yield is a result of escalating stock prices, which decrease a stock's yield, and a shift in corporate focus towards reducing dividend payouts in recent times.
Nevertheless, several companies are providing dividend yields that surpass 3%. As of now, Brookfield Infrastructure (-1.98% for BIPC, -2.01% for BIP), Rexford Industrial Realty (1.39% for REXR), and Mid-America Apartment Communities (-0.71% for MAA) are among these high-dividend stocks worth considering.
Robust expansion on the horizon
Brookfield Infrastructure boasts a yield of 3.9%. Over the years, this global infrastructure operator has demonstrated an impressive commitment to paying dividends, maintaining an annual payout increase since its establishment over a decade and a half ago. Its dividend growth rate has compounded at a remarkable 9% annually.
The company anticipates its high-yielding dividend to grow by 5% to 9% annually. Factors supporting this outlook include a solid investment-grade balance sheet, a reasonable dividend payout ratio (60% to 70% of its funds from operations, FFO), and consistent cash flow (90% is contracted or regulated).
In addition, Brookfield Infrastructure projects robust expansion. It expects inflation-linked rate increases, economic expansion, and expansion projects to boost its FFO per share growth at a rate of 6% to 9% annually. Moreover, the company aims to fuel its FFO per-share growth by more than 10% annually through accretive acquisitions funded by capital recycling.
Wide-ranging growth with further potential
Rexford Industrial Realty also offers a yield of 3.9%. Since its IPO in 2013, this industrial REIT has grown its dividend at an astounding 15% compound annual rate. Over the last five years, its dividend growth has averaged 18% annually, outperforming its industry average of 11%.
The industrial REIT predicts substantial growth in the future. It anticipates growth stemming from repositioning and redevelopment projects, rent growth, and recently secured acquisitions to contribute an additional $222 million in net-operating income by the third quarter of 2027. This implies a 34% increase from its current annualized level.
Rexford's growth prospects do not take into account potential gains from additional acquisitions outside of its recent secured acquisitions. The REIT has around $200 million in near-term acquisition investments in the pipeline. Moreover, its strong balance sheet grants it financial flexibility to carry out additional accretive acquisitions in upcoming years.
Gaining momentum in the new upcycle
Mid-America Apartment Communities presents a yield of 3.8%. Over the past fourteen years, this apartment REIT has increased its high-yielding dividend continuous, including a 5% increase in the previous year.
Currently, the REIT is grappling with headwinds brought on by an influx of new apartment supply in its markets, which has hampered rent growth. However, the company anticipates a considerable drop in new apartment supply in the coming year. This, according to CEO Eric Bolton, sets the stage for the company to enter a new multi-year cycle with demand surpassing supply.
While other developers have curtailed new investments due to higher interest rates, MAA is gearing up for growth. It has eight projects under development that it plans to complete by 2027. Furthermore, it has agreed to finance a third-party development project which it can acquire upon completion. Additionally, it recently acquired two newly completed apartment communities. MAA's financial flexibility enables it to begin new developments and make additional acquisitions, which could further boost its rental income, thereby enabling it to continue increasing its dividend.
Combining wealthy income with growth prospects
Brookfield Infrastructure, Rexford Industrial Realty, and MAA all currently provide dividend yields that surpass 3%, a noteworthy figure in the existing market environment. Moreover, their promising growth projections suggest their ability to continue boosting their dividends. This makes them rewarding dividend stocks to invest in at the present moment.
In light of the challenging yield environment, these high-dividend stocks, such as Brookfield Infrastructure, Rexford Industrial Realty, and Mid-America Apartment Communities, continue to offer yields exceeding 3%. Given their impressive track records and growth prospects, they present attractive options for investors seeking to combine income generation with capital appreciation.
Brookfield Infrastructure's dividend growth rate has compounded at an annual rate of 9%, highlighting its commitment to shareholder returns. With an expectation of 5% to 9% annual dividend growth, the company's investors stand to benefit from this income boost over the long term. Similarly, Rexford Industrial Realty's dividend growth potential is substantial, with projections suggesting a 34% increase in net-operating income by 2027. Meanwhile, MAA, despite facing headwinds, anticipates entering a new multi-year cycle with demand surpassing supply, setting the stage for future dividend growth.
