I recently increased my investment in these three notable dividend-paying stocks within my retirement portfolio, with intentions to further contribute in 2025.
I'm quite fond of investing in shares that doled out dividends. These investments provide me with a passive income stream, which I can utilize to fund my retirement expenses or reinvest as I see fit. Historically, dividend-paying stocks have shown remarkable performance. Data from Ned Davis Research and Hartford Funds suggests that the average dividend stock in the S&P 500 has outperformed non-dividend stocks by more than twice over the past 50 years.
Given this performance, I always seize the opportunity to buy more shares of high-quality dividend stocks. Recently, I boosted my positions in Starbucks, Mid-America Apartment Communities, and Rexford Industrial. Let me share why these dividend stocks are a must-have in my retirement account.
A caffeine-infused dividend boost
Starbucks is a dividend powerhouse. It yields about 2.7%, significantly higher than the S&P 500's dividend yield of 1.2%. Moreover, Starbucks has demonstrated an impressive track record of increasing its dividend annually. Since initiating its dividend payments in 2010, the company has recorded a 20% compound annual growth rate in its dividend. In October, it rewarded its investors with a 7% dividend increase, marking the 14th consecutive year of increasing its payout.
Despite being the world's largest coffee chain, Starbucks continues to expand. The company's new CEO has instigated a "back to Starbucks" strategy to refocus on its core values and reignite growth. Starbucks aims to expand to around 55,000 global locations by 2030, which should provide ample opportunities for dividend increases.
The tide turns in 2025
Mid-America Apartment Communities (MAA) is a prominent real estate investment trust (REIT) with around 104,500 apartment units spread across the fast-growing Sun Belt region. MAA is notable for its uninterrupted dividend payment history, having never cut or reduced its dividend in its 30-year existence. While it hasn't raised its dividend every year, it recently improved its dividend for the 15th consecutive year, with investors receiving a 3.1% increase in December. This increase raised its yield to 3.9%.
MAA anticipates growth through 2025 and beyond. The REIT expects to navigate the supply glut it has faced in its markets in recent years, with the oversupply fading in 2024, leading to a prolonged period of demand outpacing supply. This development will undoubtedly benefit MAA's existing portfolio and the approximately $1 billion in projects currently under development.
In addition to these projects, MAA has both the land and financial capacity to expand in the future through further developments and acquisitions. With improving market conditions, MAA's dividend growth rate is expected to accelerate in the coming years.
Built-in growth galore
Rexford Industrial Realty is a US-based industrial REIT focusing on owning warehouses in the Southern California market, a market that consistently has high demand and low supply. This focus on strategic real estate investments has enabled Rexford to achieve consistent dividend growth. Since its public offering, the company has delivered a 15% compound annual growth rate in dividends and 18% over the past five years (surpassing its peers' 11% average). Rexford yield currently stands at 4.3%.
Rexford's future growth is assured, with expectations of a 34% increase in net operating income over the next three years. This increase will result from repositioning and redevelopment projects, rent growth (reflected in its leases and leveraging market rates), and recently secured acquisitions. Furthermore, Rexford retains significant financial flexibility to make additional acquisitions should opportunities arise, which will undoubtedly further drive up its dividend payments. These catalysts could lead to above-average dividend growth moving forward.
Divine dividend stocks
Starbucks, Mid-America Apartment Communities, and Rexford Industrial Realty are dividend stocks with exceptional yields. Their impressive track records of increasing dividends make it highly likely that they will continue to do so in the future. These features are why I recently added more shares of this trio to my retirement account and plan to continue investing in these stocks in the foreseeable future. I believe they have the potential to provide a growing income stream and solid returns, making them an ideal choice for building my retirement nest egg.
Based on their strong financial performance and dividend growth, I'm planning to allocate more of my investment funds towards Starbucks, Mid-America Apartment Communities, and Rexford Industrial Realty. Their high dividend yields and consistent dividend increases make these stocks attractive options for generating income and enhancing the growth of my retirement savings.
Furthermore, I'm optimistic about the future potential of these dividend stocks. Starbucks' expansion plans, Mid-America Apartment Communities' anticipated market conditions, and Rexford Industrial Realty's growth initiatives all suggest promising dividend growth rates, providing me with a reliable source of income in the long term.
