Passive income when you’re no longer actively working is anchored for many by their Social Security draw. But for the average retiree, that’s only $1,844.76 a month, according to November 2023 figures from the Social Security Administration.
For most folks, that means relying on other income sources, including the dividends you can generate from your stock investments. I’m an average retiree myself, and I’ve amassed a modest collection of real estate investment trusts (REITs) in my stock portfolio over the past few years just for that purpose.
Image source: Getty Images.
By tax law, REITs must pay at least 90% of their taxable income as dividends. That income comes from pools of property across about any sector you can think of, so you can diversify your selections while choosing companies with long track records of reliably growing their business and their dividends.
Three that I’d like to highlight here are American Tower(NYSE: AMT), Federal Realty Investment Trust(NYSE: FRT), and Mid-America Apartment Communities(NYSE: MAA).
The chart below shows the steady growth of their dividends and the consistency of their yields since American Tower converted into a REIT in 2012, about 15 years after its original IPO.
MAA Dividend Chart
Here’s more about each.
1. American Tower
American Tower is one of the world’s largest REITs and owners of multi-tenant communications real estate, with a portfolio of about 225,000 traditional cell towers and other antenna sites around the world and a network of data centers across the United States.
The growing global appetite for must-have space by thousands of customers, including all the major mobile carriers, has enabled Boston-based American Tower to raise its dividend every year since its REIT conversion, including by an average of 12.5% each year for the past three.
American Tower stock currently yields about 3.2% at a share price of about $214 and comfortably covers that dividend with a payout ratio of about 61% of its cash flow.
2. Federal Realty Investment Trust
Federal Realty is a Dividend King and one of the oldest REITs. It was originally founded in 1962 not long after Congress authorized REITs as a way to make real estate investing more accessible to the average American.
The Dividend King status comes from its 56 straight years of dividend increases. Its income comes from a collection of 102 open-air centers, housing 3,300 commercial tenants and 3,100 residential units.
Their location in affluent, first-ring suburban markets on the East and West Coasts should help suburban Maryland-based Federal Realty continue the resilience it’s shown through good and bad economies and everything in between.
Federal Realty stock currently trades for about $102 a share and yields about 4.3%. Its payout ratio of about 51% is based on cashflow that’s modest enough to point to the ability to grow the dividends faster than the 1.3% a year or so of the past three years, if the C-suite is so inclined.
3. Mid-America Apartment Communities
Mid-America Apartment Communities, or MAA, is a Tennessee-based developer and manager of apartment communities in the mid-Atlantic, Southeast, and Southwest.
A portfolio that as of June 30, 2023 included 101,986 units in 300 apartment complexes across 16 states and the District of Columbia makes MAA one of the U.S.’s largest owners of multifamily properties.
The growing ranks of young professionals, families, and downsizing retirees in the Sunbelt and other desirable markets where MAA is focused should keep demand for its living spaces high. Meanwhile, its stock is trading at about $132 a share and yielding about 4.3%, and MAA is riding a 14-year streak of dividend increases.
That includes an impressive annualized three-year growth of just over 23% and a payout ratio of only 55%, based on cashflow that should easily support even more boosts.
Reliable payment stream for retirees, passive or otherwise
American Tower, Federal Realty, and MAA are excellent choices for 2024 and beyond for reliable payment streams (and the possibility of capital growth) for folks seeking to bolster their income, no matter how active or passive their retirement may be.
Should you invest $1,000 in American Tower right now?
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Marc Rapport has positions in American Tower, Federal Realty Investment Trust, and Mid-America Apartment Communities. The Motley Fool has positions in and recommends American Tower and Mid-America Apartment Communities. The Motley Fool recommends the following options: long January 2026 $180 calls on American Tower and short January 2026 $185 calls on American Tower. The Motley Fool has a disclosure policy.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
