Investors who are seeking income generation may want to take a look at real estate investment trusts and sector-related exchange traded funds, especially as REITs are dishing out more yields.
“Perhaps investors should start to consider REITs as dividend growth stocks,” Todd Rosenbluth, S&P Capital IQ Director of ETF & Mutual Fund Research, writes in a research note.
Chris Hudgins, a real estate analyst for SNL Financial, calculated that 101, or 45%, of U.S. publicly traded REITs and property companies in his database have increased dividends at least once for the year ended October.
The number of REITs raising dividends is on the rise, with 88 companies increasing yields at this point in 2013 and 92 companies in 2014.
While yields on 10-year Treasuries are moving higher in anticipation that the Federal Reserve will hike interest rates for the first time in almost a decade, Hudgins noted that 12 U.S. REITs and property companies also raised dividends in October, up from seven in September.
For instance, Simon Property Group (NYSE: SPG), which raised quarterly dividends in late October by 3.2%, has raised its dividends during all four quarters of 2015 and its annual dividend is 56% higher than three years ago, Rosenbluth said. SPG is one of the largest owners of shopping centers in the U.S. and its relationship with numerous retailers will provide the company with long-term growth, according to S&P Capital IQ Equity Analyst Cathy Seifert.
Crown Castle (NYSE: CCI) has already tripled its quarterly dividends since it began issuing dividends in February 2014. S&P Capital IQ Equity Analyst Angelo Zino believes CCI will capitalize on continued growth in higher tower site rentals in an increasingly digital age.