I recently increased my holdings of these two dividend-yielding stocks within my retirement portfolio, with plans to accumulate even more of their shares throughout 2025.
I'm loading my retirement savings with shares that pay out dividends. The logic is straightforward: Dividend-dispensing stocks have historically surpassed non-dispersers by a significant margin. The largest improvement has stemmed from companies consistently boosting their dividends. Information from Ned Davis Research and Hartford Funds indicates that dividend boosters have produced an average annual total return of 10.2% over the past 50 years, versus 4.3% for the typical non-dividend provider.
My plan is to zero in on stocks that prioritize dividend distributions. Consistent expansion and a high-yielding payout serve as strong indicators. Camden Property Trust (CPT -1.00%) and EastGroup Properties (EGP -0.89%) definitely fit the description. Consequently, I recently acquired additional shares, and I anticipate that this trend will continue into the following year.
The fortitude to persistently grow
Camden Property Trust is a real estate investment trust (REIT) that specializes in owning residential rental properties. The firm currently controls 172 properties with approximately 58,250 rental units. Its focus is on acquiring apartments and single-family rental homes in high-growth markets benefiting from above-average employment and population expansion. It operates properties in 15 major markets, primarily situated in the southern half of the United States.
The residential REIT's dividend yields 3.6%. This is around three times higher than the S&P 500's dividend yield (approximately 1.2%).
Camden exhibits a strong history of increasing its dividend. Although the REIT had to reduce its payout during the Great Recession, growth resumed promptly, and its payment now surpasses its pre-recession levels.
The REIT is well-positioned to boost its dividend payout in the future. It boasts a relatively low dividend payout ratio (around 70% of its adjusted funds from operations [FFO] this year). Its financial health is also robust. This affords it the flexibility to expand its portfolio further.
Camden currently has six communities either under construction or in the process of lease-up, which should stabilize in the near future. It has already financed about 65% of the estimated $747 million cost for these multifamily and build-for-rent single-family communities. Given its robust liquidity, it can easily finance the remaining cost (it has nearly $1.1 billion in cash or availability under its credit facility).
This strong liquidity will enable the REIT to carry on growing. It currently has three more projects in the works, representing $673 million in future investment potential. It can also make acquisitions (land suitable for future developments and operating communities) when suitable opportunities present themselves. With a strong financial profile and visible growth prospects, Camden should have no trouble increasing its dividend in the future.
Extremely consistent growth
EastGroup Properties is an industrial REIT that focuses on owning warehouses. It currently manages about 60.5 million square feet of space, primarily in the rapidly expanding U.S. Sunbelt region.
The company has constructed about half of its portfolio from scratch. It has invested around $3 billion since 1996 to construct 263 properties with 30.1 million square feet of space. EastGroup Properties develops in business park settings because this method yields higher returns with less risk. EastGroup Properties also acquires warehouses, including operating properties with value-add potential from expansion, redevelopment, or leasing opportunities.
EastGroup's strategy has served investors well over the years. It recently announced its 180th consecutive quarterly dividend. It has either maintained or increased its dividend for the past 32 years, and boosted it in 29 of those years, including the past 13 consecutive years. Its payout yields 3.5%.
The industrial REIT is well-positioned to continue enhancing its dividend payout. It currently has 17 development and value-add projects in progress at a total projected cost of $528 million. These investments will boost its cash flow as they are completed in the upcoming quarters. Meanwhile, EastGroup maintains a strong financial profile, providing it the flexibility to continue expanding its portfolio as opportunities present themselves. For example, it spent $144 million to acquire operating properties across three existing markets this year.
Given Camden Property Trust's strong financial health and history of increasing dividends, I'm considering investing more money in this real estate investment trust. With its current dividend yielding 3.6%, significantly higher than the S&P 500's dividend yield, it presents an appealing opportunity for income-driven investors.
The consistent dividend growth at EastGroup Properties, with its 180th consecutive quarterly dividend and 13 consecutive years of boosting its payout, makes it an attractive option for investors looking for steadily increasing income. Its strategic focus on developing and acquiring warehouses in high-growth areas further strengthens its dividend-growth potential.
