3 No-Brainer Dividend Stocks to Buy Right Now for Less Than $1,000

Dividend stocks can be excellent long-term investments. Over the last 50 years, the average dividend stock has outperformed the equal-weighed S&P 500 index, with the best total returns coming from dividend growers.

REITs tend to be great dividend growth stocks. Agree Realty (ADC -0.03%), Rexford Industrial Realty (REXR -1.17%), and Invitation Homes (INVH -1.20%) are among the many REITs with excellent records of steadily increasing their dividends. That makes them no-brainer buys for those who have a little bit of cash to put to work right now.

Stability pays dividends

Agree Realty has increased its dividend at a 5.6% compound annual rate over the past decade. The retail REIT currently pays a monthly dividend that yields nearly 5%, several times above the S&P 500's 1.3% dividend yield. To put that into perspective, an investor can generate nearly $5 of annual dividend income for every $100 they invest into the REIT. That compares with a little over $1 in annual dividend income from an S&P 500 index fund.

The REIT owns properties net leased or ground leased to financially strong retailers. Those lease structures provide it with very stable cash flow. It typically pays out less than 75% in dividends. That provides it with a healthy cushion that it can use to reinvest into additional income-generating properties.

Agree Realty typically buys properties from existing retail partners in sale-leaseback transactions. It also provides funding to develop new properties. Its partners currently own over 165,000 properties, giving the REIT, which owns about 2,200 locations, a long growth runway.

Focus pays dividends

Rexford Industrial Realty is an industrial REIT focused exclusively on the Southern California logistics market. It owns more than 400 properties in a region with tight supply and high demand. That keeps vacancy rates low while driving strong rent growth.

The REIT's focused strategy has paid big dividends. It has grown its earnings at a 15% compound annual rate over the past five years, driven by rent growth, acquisitions, and repositioning and redevelopment projects. That has enabled the REIT to increase its dividend at an 18% average annual rate in the past five years. Those rates are well above its peer group average of 11% for earnings and 10% for dividends.

Rexford should be able to grow its earnings and dividend, which yields nearly 4%, at a healthy pace in the coming years. The REIT estimates that embedded rent growth, recent acquisitions, and investments to reposition and redevelop existing properties should grow its net operating income by 47% over the next three years. On top of that, it has a strong financial profile, giving it plenty of flexibility to continue making new investments in the coming years.

Strategy pays dividends

Invitation Homes is a residential REIT focused on single-family rental homes. It owns or has an interest in nearly 90,000 homes and manages another 17,000 for third-party owners. These properties are in 16 markets where population and jobs are growing at above-average rates, and supplies are constrained, making it much more expensive to buy than rent. Those factors are keeping occupancy high and driving strong rent growth.

In addition to rent growth, Invitation Homes is steadily expanding its portfolio. It buys homes from several sources, including from builders. It recently agreed to buy 500 more newly built homes that it should start taking possession of later this year, part of 1,000 it expects to close by the end of the year. It also launched a third-party management platform earlier this year, which is growing fast. It recently added 4,000 homes to that platform as part of a joint-venture investment.

Rising rents and a growing portfolio should enable Invitation Homes to continue increasing its dividend. It raised its payout by nearly 8% earlier this year and has increased it by more than 250% since coming public in 2017.

Great dividend stocks

REITs can be excellent dividend stocks. That has certainly been the case for Agree Realty, Rexford Industrial Realty, and Invitation Homes over the years. With more dividend growth likely, they seem like no-brainer buys right now. Given their higher yields, they can generate more income from every dollar invested, making them great for those who don't have a lot of cash to invest right now.