Top 3 Dividend Stocks For Reliable Income

Investing in dividend stocks is an excellent strategy for generating passive income and growing your wealth over time. With the current market conditions, finding reliable dividend stocks can be challenging. However, there are still top dividend stocks that offer consistent income and growth potential. In this article, we will explore the top 3 dividend stocks for reliable income: Realty Income, Rexford Industrial, and Mid-America Apartment Communities.

Realty Income (O) is a top-tier real estate investment trust (REIT) that is currently on sale. Shares of Realty Income have lost more than 15% of their value from the peak earlier this year, driving its dividend yield up over 6%. This high-yielding dividend is on an extremely firm foundation, as Realty Income owns a diversified real estate portfolio, including retail, industrial, gaming, and other properties. The REIT's net leases supply it with very stable rental income because the tenants cover real estate taxes, routine maintenance, and building insurance. Realty Income pays out a conservative percentage of its cash flow in dividends, about 75% of its adjusted funds from operations, which enables it to retain a meaningful amount of cash to fund new income-generating real estate investments. The REIT also boasts one of the strongest balance sheets in the sector, giving it additional financial flexibility to fund new investments. This growing portfolio should enable the company to continue increasing its dividend, something it has done 128 times since coming public in 1994.

Rexford Industrial (REXR) is another top dividend stock that offers meaningful growth already built in. Rexford Industrial's stock has gotten hit really hard this year, slumping more than 30% from its peak. That has pushed its dividend yield up to 4.4%. The main issue is a slowdown in the Southern California industrial real estate market, which is its sole focus. It's the largest industrial market in the country and consistently has the highest demand and the lowest supply. While demand has cooled off from its peak, it's still very strong. That's driving robust rent growth in the market. For example, Rexford executed 657,000 square feet of new and renewal leases earlier in the fourth quarter at a whopping 60% increase compared with the prior rents on those spaces. Meanwhile, occupancy remained healthy at 95.9%. Given where market rents are, Rexford has significant built-in growth. The REIT estimates it will add an incremental $72 million to its net operating income (NOI) over the next three years as legacy leases expire and it signs new leases at higher market rates. Add embedded rental increases on existing leases -- for example, leases signed in the fourth quarter will rise at a 3.9% annual rate -- along with its current repositioning and redevelopment projects and recently secured acquisitions, and its NOI should grow 34% over the next three years. Meanwhile, there's more upside potential from additional accretive acquisitions. These catalysts should enable the REIT to continue growing its dividend, which has delivered 18% compound annual dividend growth over the past five years.

Mid-America Apartment Communities (MAA) is a residential REIT that is entering a new growth cycle in 2025. Mid-America Apartment Communities stock has slumped almost 10% from its recent high, pushing the residential REIT's dividend yield up to around 4%. The apartment landlord has battled supply issues this year, which has affected rent growth. However, strong housing demand in its markets has steadily absorbed this new apartment supply, which has now peaked. That drives the REIT's view that "in calendar year 2025 we will see a meaningful decline in the amount of new supply impacting our portfolio, and we will enter a new multiyear cycle with demand outpacing supply." Mid-America should benefit from an acceleration in rent growth over the next year. The company will also get a boost from the nearly $1 billion of apartment development projects it has coming online over the next few years into what should be much stronger market conditions. On top of that, it has the financial capacity to approve new development projects and make additional acquisitions, further enhancing its ability to capitalize on the upcoming growth cycle. This growth should enable the REIT to continue increasing its dividend, which it has done for 15 straight years.

In conclusion, Realty Income, Rexford Industrial, and Mid-America Apartment Communities are top dividend stocks for reliable income. Their high yields, stable cash flows, and strong balance sheets make them attractive investments for income-oriented investors. As the market continues to evolve, these REITs offer consistent income and growth potential, making them excellent choices for long-term investors.