Sun Communities vs Agree Realty: Which REIT is the Better Dividend Stock?

Sun Communities and Agree Realty are both real estate investment trusts (REITs) that generate income through different business models. Agree Realty owns single-tenant net-lease retail properties and has a 4.2% dividend yield, while Sun Communities owns mobile home parks and RV resorts with a 3.4% dividend yield. Agree Realty has increased its dividend annually for over 10 years and has a higher dividend growth rate of 5% during the past decade.

Sun Communities (NYSE: SUI) and Agree Realty (NYSE: ADC) are both Real Estate Investment Trusts (REITs) that generate income through distinct business models. Agree Realty owns single-tenant net-lease retail properties, offering a 4.2% dividend yield, while Sun Communities owns mobile home parks and RV resorts, with a 3.4% dividend yield. Agree Realty has a proven track record of increasing its dividend annually for over 10 years, with a higher dividend growth rate of 5% during the past decade.

Sun Communities operates in the mobile home park and RV resort niches, which are expected to see solid, long-term growth due to the increasing number of older people seeking lower-cost living options. Meanwhile, Agree Realty focuses on single-tenant retail properties, which are generally easier to buy, sell, and manage, providing a robust growth model through acquisitions.

From an income perspective, Agree Realty's 4.2% dividend yield is higher than Sun Communities' 3.4%. However, Sun Communities' yield is near its highest level in five years, indicating potential attractiveness for income-focused investors. Agree Realty's dividend has been increased annually since 2012, with a consistent growth rate of 5% over the past decade, compared to Sun Communities' 4% growth rate.

Looking ahead, the net-lease retail property niche offers a larger opportunity set than the mobile home park and RV resort niches. This advantage allows Agree Realty to drive growth through acquisitions, while Sun Communities' properties may face more significant hurdles in securing new approvals. Despite this, Sun Communities' properties could be more valuable due to their unique nature.

In conclusion, while both REITs have their merits, Agree Realty's higher yield, better dividend growth history, and larger opportunity set for acquisitions make it a more attractive option for dividend-focused investors. However, Sun Communities remains a viable investment, particularly for those seeking growth in the mobile home park and RV resort sectors.

References:
[1] https://www.aol.com/better-dividend-stock-sun-communities-101000082.html
[2] https://www.theglobeandmail.com/investing/markets/stocks/O-N/pressreleases/33853906/better-dividend-stock-sun-communities-vs-agree-realty/