If you’re looking for high yields, all three of these stocks boast above-market yields and prices below $200.
The S&P 500 Index has a very low dividend yield of 1.2% today. You would have to have a huge portfolio to earn a livable income from this yield. But you can easily push it to 4%, 4.8%, or even 5.6% without taking on huge investment risk. All you have to do is look at net-lease real estate investment trusts (REITs) like Agree Realty. (ADC 1.07%)NNN REIT (NNN 0.87%)W.P. Carey (W.P.C. 1.72%)all of which trade at under $200 per share. However, they’re all a little different, so we’ll provide an overview of each to help you be sure to choose the one that’s best for you.
What Unites Them All
Agree Realty, NNN REIT, and WP Carey all share a very important characteristic: they’re all net lease real estate investment trusts. A few takeaways here: First, REITs were created specifically to pass on income to shareholders. As long as they distribute at least 90% of their taxable income as dividends, they can avoid corporate taxes. Most REITs distribute much more than that because of the way depreciation is counted in Generally Accepted Accounting Principles (GAAP) earnings. But at their core, these three high-yield stocks are focused on paying dividends.
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The second part of the equation here is the focus on net leases, a specific niche in the REIT sector where primarily single-tenant properties are leased to tenants who are contractually obligated to pay most of the property-level operating expenses. This reduces operating costs and business complexity for net lease REITs. And while there is a higher risk of vacancy for any given property, net lease REITs can offset that risk by having a large portfolio. Overall, large net lease REITs tend to be a fairly low-risk investment option.
Why buy Agree Realty?
First, some basics: Ugly Realty’s dividend yield is about 4%. The company has increased its dividend every year for about a decade. During that time, the dividend has grown at about 6% annualized. The company also owns over 2,200 properties, mostly retail assets in the United States.
What’s really interesting here is the dividend growth rate, which is pretty good for a net-lease REIT, and explains why investors, using dividend yield as a rough valuation metric, have valued Agree higher than its peers. But if you’re looking for a stock with growth and profitability, Agree is worth keeping an eye on.
Why buy NNN REIT?
NNN REIT has a strong dividend yield of 4.8% and has grown its dividend by about 3% over the past decade. Like Agree, NNN REIT specializes in U.S. retail real estate and owns a portfolio of about 3,500 properties. But the really important number is that NNN REIT has increased its dividend every year for 35 consecutive years.
NNN REIT isn’t going to wow you with its dividend growth, but it has proven that it knows how to keep paying its dividends through good times and bad. Note that the dividend was never cut, even during the Great Recession caused by the financial crisis. If consistency is what you’re looking for, NNN REIT could be a dividend stock that’ll help you sleep well at night.
Why should I buy WP Carey?
Perhaps the most difficult stock on this list to value is WP Carey. This net lease REIT cut its dividend at the beginning of 2024 but then increased it in each of the two quarters following the cut. This puts the dividend back on the same growth trajectory as it was before the cut. Importantly, the dividend cut was driven by the company’s deliberate exit from the office segment, a move so large that it forced WP Carey to reset its dividend as it reset its business. However, this negative factor is part of the reason why the yield is so high at 5.6%.
In the long run, WP Carey is actually operating in a position of strength. In fact, removing office assets from its portfolio has given the company record levels of liquidity that it can use to invest in more favorable new properties. There are plenty of ways to do so, as WP Carey is one of the most diversified net lease REITs available to buy. The company’s portfolio includes warehouse, industrial, and retail assets (as well as a sizable “other” group) across the U.S. and Europe. If you don’t mind a very modest turnaround story, WP Carey is a great fit for you, and it stands to reap handsome dividends as it works to regain investor confidence.
Time to take a closer look at high-yielding stocks
Don’t give up on dividend stocks just because the S&P 500 yields are low. With a little effort, you can find great high-yield stocks, even if you’re working with little capital. With $200, you can afford to buy Agree, NNN REIT, and WP Carey. Each has its own appeal, but they all share a relatively low-risk, high-yield business approach.
