Investing in REITs is a great way to generate passive income.
Earning passive income can put you on the path to financial freedom. Over time, this income could grow to cover your expenses.
Investing in real estate is one of the many ways to start generating passive income. There are many options in this sector. The easiest for beginners is to invest in real estate investment trusts (FPI). Most REITs pay higher yield dividends that grow steadily over time, making them ideal passive income investments. Here are five great investments to invest $5,000 in right now:
|
Dividend stocks |
Investment |
Current performance |
Annual dividend income |
|---|---|---|---|
|
Approve real estate (ADC 0.26%) |
$1,000.00 |
4.9% |
$49.10 |
|
Mid-America Apartment Communities (MAA -0.12%) |
$1,000.00 |
4.2% |
$42.30 |
|
Industrial deer (DEER 1.07%) |
$1,000.00 |
4.2% |
$42.20 |
|
WP Carey (WPC 0.71%) |
$1,000.00 |
6.3% |
$63.20 |
|
Vici Properties (VICI -0.47%) |
$1,000.00 |
5.9% |
$59.30 |
|
Total |
$5,000.00 |
5.1% |
$256.10 |
Data source: Google Finance. Note: Dividend yields as of June 27, 2024.
Here’s a closer look at these income-generating REITs.
A pleasant source of income
Agree Realty is a real estate investment trust specializing in independent properties net rented Or rented land to financially strong retailers. These leases provide him with very a stable rental income that tends to increase every year. It pays out less than 75% of that income to investors as dividends each month.
The REIT has increased its dividend at a compound annual rate of 5.6% over the past decade. This steady growth should continue as Agree Realty expands its portfolio of income-producing real estate. It plans to invest about $600 million in new properties this year. It should have a long runway of growth ahead of it. Most retailers continue to expand their footprints and often monetize their real estate through sale and leaseback transactions to fund their continued growth. Agree Realty tends to work with expanding retailers, which provides it with a constant stream of new investment opportunities.
A bright future
Mid-America Apartment Communities, or MAA, is a leading residential REIT focused on apartment ownership in the growing Sun Belt region. Due to population migration, demand for housing has increased has increased steadily across the South. This has benefited existing communities (high occupancy rates and steadily increasing rents) while opening the door to the development of new communities.
MAA’s occupancy rate was 95.3% in the first quarter, while rents increased by 1.5%. These levels are lower than its recent averages due to an augmentation of The supply of new apartments in its markets should increase as those markets absorb this new supply, which should happen later this year and in 2025, with occupancy levels and rents expected to improve. In the meantime, the company has five new communities under construction and plans to start four to six more over the next two years. These factors should allow the REIT to continue to increase its dividend as it did in 2015. each of the the last 14 years.
Taking advantage of strong demand for industrial real estate
Stag Industrial is an industrial real estate investment trust specializing in warehouses and light manufacturing facilities. These properties provide it with steadily increasing income to pay its monthly dividend.
Demand for industrial real estate has been strong since the pandemic. Accelerated adoption of e-commerce, changing inventory management practices, and the reshoring of manufacturing have increased the need for these properties. This is driving strong rent growth for Stag as existing leases expire (new leases and lease renewals signed in the first quarter were 30.5% higher in cash terms than prior rates for the same space). The company also continues to acquire additional revenue-generating industrial properties (it expects to purchase $350 million to $650 million worth of properties this year). These factors should allow it to to regularly increase its dividend.
Back on a growth trajectory
WP Carey is a diversified real estate investment company who concentrates The Company owns single-tenant industrial, warehouse and retail properties leased to high-quality tenants. The Company also operates a portfolio of self-storage properties. These properties provide the Company with stable and growing revenues, with the majority of its leases linked to inflation.
The fund recently sold or spun off most of its office properties to focus on asset types with better long-term fundamentals. This strategic shift was accompanied by a dividend reset.
However, WP Carey has begun rebuilding its portfolio (it has committed to investing $700 million in warehouse, industrial and retail properties this year) and its dividend (already two increases in 2024). The company has plenty of financial flexibility to continue improving its portfolio, which should boost its cash flow and dividend.
An interesting source of income
Vici Properties focuses on experiential real estate, such as casinos, bowling alleys and other leisure and entertainment properties. It leases these properties to operators under long-term net leases, which provide it with very stable and growing rental income.
The REIT has grown rapidly. It has increased its dividend at a compound annual rate of 7.9% since 2018, driven by a steady stream of new investments. Vici Properties has acquired several gaming and non-gaming properties, completed a transformational merger with another gaming REIT, and invested in several development projects. It partners with leading experiential retail operators, who provides him new investment opportunities. Recent transactions include financing improvements to the Venetian Resort Las Vegas and the development of a new Margaritaville resort in Kansas City.
Great Ways to Turn Money into Income
REITs allow anyone to start earning passive income through real estate. Most of them offer attractive dividend yields and tend to increase their payouts each year. Therefore, the more money you invest in REITs, the more income you should be able to generate in the future.
Matt DiLallo holds positions in Mid-America Apartment Communities, Stag Industrial, Vici Properties, and WP Carey. The Motley Fool holds positions in and recommends Mid-America Apartment Communities, Stag Industrial, and Vici Properties. The Motley Fool recommends WP Carey. The Motley Fool has a disclosure policy.