REITs will give you an opportunity to invest in these properties, similar to the way you invest in stocks. Historically, commercial property has been one of the most profitable ways to invest in real estate. But you’ll also participate in capital appreciation when properties within the trust are sold. REITs distribute net income from the trust in the form of dividends. Those can include office buildings, retail centers, large apartment complexes, medical facilities and other types of non-residential property. But not just any real estate – a typical REIT holds commercial properties. REITs are something like mutual funds that invest in real estate. If you want to invest in real estate, but you don’t want the responsibility of maintaining one or more individual properties, you can invest in real estate investment trusts, commonly known as REITs. And throughout the process, there will be maintenance and repair requirements that will cost you in money, time, or both.
You will need to be involved in purchasing the property, getting it ready for occupancy, and finding new tenants each time a previous one moves out. In fairness to reality, however, it has to be said that rental real estate is at best a semi-passive investment. If you hold the property until the mortgage is paid, you’ll have a choice to either keep the property and collect an even larger share of the rent as profit, or sell the property for a huge, one-time windfall. At that point, you’re profiting from two different directions – capital appreciation and a net profit on rent. But as rent levels rise over the years, the property will eventually produce a positive cash flow.Īll while that process is taking place, the value of the property is rising. At a minimum, the rent should cover the monthly mortgage payment. With investment property, you’ll rent the home to tenants. Investment real estate plays on that appreciation, and more. If you own your home, you’re already aware of the potential for capital appreciation. Of course, I mean investment real estate, the kind that produces rental income. The ProShares S&P 500 dividend aristocrats ETF has a current dividend yield of 2.57%, and has returned an average of 12.52% annually for the past five years (through December 31, 2020), including 8.37% in 2020. (5.0%).īut if you prefer, you can invest in a dividend aristocrat ETF.
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Furthermore, you can be confident it's a company that knows how to grow its cash flow in order to sustain the annual dividend increases.”Įxamples of high dividend stocks included in the dividend aristocrats are AT&T (7.2% yield), Cardinal Health Inc. “By prioritizing establishing a track record of annual dividend raises for a quarter of a century or more, there is less of a chance of making boneheaded and expensive acquisitions or ill-timed stock buybacks. “When you own a Dividend Aristocrat you own shares of a business whose management has proven it understands its fiduciary responsibility to shareholders,” recommends Marc Lichtenfeld, Chief Income Strategist at The Oxford Club. The list currently includes 65 stocks, each listed on the S&P 500, and providing at least 25 years of steady dividend increases. One place to find the best dividend paying stocks is with the Dividend Aristocrats. Adds Johnson: “Coca-Cola, Hormel, Genuine Parts, Procter & Gamble and Johnson & Johnson are all examples of dividend kings that have increased dividends for more than 50 consecutive years.” Dividend Aristocrats
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