Want To Defeat Inflation? Three REITs That Keep Raising Dividends

Although recent consumer price index (CPI) reports have signified that inflation levels are slowly declining from the much higher percentages of the past two years, inflation remains a problem for many Americans, especially those on fixed incomes in retirement.

But many retirees or those nearing retirement age benefit from investing in dividend stocks, such as real estate investment trusts (REITs), because the monthly or quarterly payments help them in paying ongoing expenses. And unlike a CD, high-quality REITs often increase dividend amounts from year to year, keeping up with or surpassing inflation, while boosting the initial yield that the investor received at the time of the stock purchase.

Take a look at three well-known REITs that have excellent long-term histories of increasing dividends to fight inflation and have raised dividends again.

Realty Income Corp O is a San Diego-based, triple-net lease REIT, with over 13,250 properties around the world. The Monthly Dividend Company, as it's widely known, is a member of the S&P 500 and an S&P 500 Dividend Aristocrat. The occupancy rate for its entire portfolio is 99%.

Realty Income is one of the foremost REITs today and with good reason. Its total return since Jan. 1, 1995, is 1,184%.

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On Dec. 12, Realty Income announced an increase in its monthly dividend from $0.256 to $0.2565 per share. The dividend is payable on Jan. 12 to shareholders of record as of Jan. 2. The ex-dividend date is Dec. 29. The new annualized dividend amount of $3.078 presently yields 5.64%. This was the 123rd dividend increase since 1994 and the 105th consecutive quarter of dividend increases.

Over the past five years, the dividend increases are not as large as some other REITs, but they are more consistent. The dividend growth rate since December 2018 is 22.1%, so the monthly checks help investors keep up with inflation. Like the turtle that beat the hare, Realty Income keeps plodding along, sending out ever-increasing dividend payments like few other REITs.

Mid-America Apartment Communities Inc. MAA is a self-administered residential REIT that specializes in purchasing and leasing apartment complexes. It owns just under 102,000 units in 300 communities across 16 states and Washington, D.C. Most of Mid-America Apartment Communities' properties are in the Southeast, Southwest and Mid-Atlantic states.

Mid-America Apartment Communities is a member of the S&P 500 and has been a public company for 28 years. The Atlanta and Dallas areas comprise over 22% of its same-store net operating income.

On Dec. 12, Mid-America announced a 5% increase in its quarterly dividend from $1.40 to $1.47 per share, payable Jan. 31 to shareholders as of Jan. 12. The ex-dividend date is Jan. 11. 

This was the second time in 2023 that Mid-America has raised its dividend. In January, the quarterly dividend was raised 12% from $1.25 to $1.40 per share. And Mid-America gave shareholders another hefty dividend increase in July 2022 from $1.088 to $1.25. If you are an investor in Mid-America, you've now received 35% in dividend increases over the past 18 months.

The dividend increases show the ongoing strength of the REIT's ability to increase its funds from operations (FFO), along with management's faith in its future. The annual dividend of $5.88 per share now yields 4.6%.  

Since 1994, Mid-America has paid 119 consecutive quarterly cash dividends and raised dividend payouts by 465%, or about 16% per year. That is well beyond the level of historic inflation. 

CubeSmart CUBE is a Malvern, Pennsylvania-based, internally managed self-storage REIT with 1,374 storage facilities across the U.S. It had its initial public offering (IPO) in 2004 under the name U-Store-It, and in 2011, it was rebranded as CubeSmart. Between 2012 and 2022, CubeSmart grew its FFO per share by 242%. Its same-store occupancy rate was recently 92.1%.

On Dec. 7, CubeSmart announced a 4.1% increase in its quarterly dividend from $0.49 to $0.51 per share. The dividend is payable on Jan. 16 to shareholders of record on Jan. 2, and the ex-dividend date is Dec. 29. The new annual dividend of $2.04 per share yields 4.87%.

CubeSmart continues to have an excellent dividend growth record. With this new increase, the dividend has grown 59.37% from $0.32 to $0.51 per share over the past five years. The payout ratio of 76.6% is still well covered by earnings.

Investors who bought CubeSmart at its IPO price of $16 in November 2004 received an initial forward dividend yield of 5% from the first paid quarterly dividend of $0.20. But anyone who has held their shares since that time now has a yield of 12.75%. And that's why if you want to defeat inflation, high-quality REITs such as Realty Income, Mid-America Apartment Communities and CubeSmart make excellent purchases.

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