Nearing Retirement? The 3 Best Real Estate Dividend Stocks to Buy Now.

For many people, a healthy lifestyle means living longer and spending more time in retirement. But Social Security can only go so far for most people, which reinforces the importance of using investments to generate income in the years after work.

Dividend-paying stocks are a natural choice here, with the added potential benefit of long-term capital appreciation that can help offset inflation.

Real estate investment trusts (REITs) are a good option. They own income-generating assets and are required to pay at least 90% of their taxable income as dividends to shareholders.

Three to put on your list of the best real estate dividend stocks to buy now are: digital real estate (DLR -0.88%), Gladstone ad (WELL -2.06%)and real estate income (O -0.87%).

DLR dividend yield chart

DLR dividend yield. Data from YCharts.

We’re looking for consistent revenue flow, and the chart above shows how these three REITs have delivered it since the Great Recession. They would also help with diversification as they are in different real estate sectors, each responding to their own market conditions.

1. Digital real estate

Digital Realty’s stock is down about 38% so far this year, twice as much as the stock S&P500, but its role as a key provider of infrastructure for the digital world has not disappeared. This REIT operates around 300 data centers around the world with a customer list in the thousands, led by Amazon, Microsoft, oracleand alphabetis google.

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Alongside general market weakness, Digital Realty’s doubters point to concerns that its biggest clients could become competitors as they build their own data operations. But this REIT is expanding its operations and income as a turnkey solution for businesses, governments, and other organizations to get to the cloud quickly and efficiently.

There’s significant upside here, too, if analysts are to be believed. They give the stock a consensus price target of $160.71. It now trades for about $108 a share, and after 17 straight years of dividend increases, it’s yielding about 4.5%.

2. Gladstone Advertisement

Gladstone ad is a much smaller REIT than the other two here, but with a much higher yield, and that’s no coincidence. This owner of 136 industrial and office properties in 27 states has been a dividend machine since going public in 2003.

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David Gladstone, chief executive officer, said in a recent interview with the Motley Fool that this REIT and the other public companies under his jurisdiction are run with an income eye on them and an eye on attracting Social Security retirees and other income investors.

Gladstone says to maintain that record, the company is dumping office properties in favor of industrial buildings, including manufacturing and logistics sites, which he sees as more promising. Meanwhile, investors can enjoy a current yield of more than 8% from a company that hasn’t missed or cut a monthly dividend payment in its nearly 20-year history.

3. Real Estate Income

If monthly income is music to a retiree’s ears, then the “Monthly Dividend Company,” as Realty Income calls itself, is a hit. This retail REIT has paid out to shareholders 12 times a year for more than 50 uninterrupted years and has increased that payout at least once a year for more than a quarter century, making it a Dividend Aristocrat.

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Realty Income generates reliable cash flow from a portfolio of more than 11,000 properties and a focus on single tenant retailers who have long-term net leases, where the tenant pays for items such as taxes, insurance and maintenance. The tenant list, meanwhile, includes a who’s who of major retailers, including Walgreens, 7-Elevenand Dollar General.

Realty Income yields 4.7% and trades for about $63 a share. Analysts give it a consensus price target of $76.57, which means they see significant upside potential for this long-term provider of reliable income for retirees — and those still on the way.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Marc Rapport has positions in Alphabet (A shares), Amazon, Digital Realty Trust, Gladstone Commercial and Realty Income. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Digital Realty Trust, and Microsoft. The Motley Fool has a disclosure policy.

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