If you are watching the market volatility and worried about the future, you might want to shift the way you look at things. An easy win is to add some dividend-paying stocks to your portfolio so you can pay attention to dividend checks instead of the ups and downs of the S&P 500 index. Three great starting points are Vici Properties (NYSE: VICI), Realty Income (NYSE: O), and Dividend King Federal Realty (NYSE: FRT).
1. Vici Properties owns the most important gaming asset
Vici Properties came public in 2018, so it is a rather young real estate investment trust (REIT). That said, it has increased its dividend each year since its IPO. The really interesting thing about this landlord, however, is what it owns. It is focused almost entirely on owning Casino properties.
Casinos are gigantic structures that house gaming, hotels, restaurants, shopping, and event spaces. Although the company's tenants operate everything, they need the space if they want to remain in business. This is why, even during the coronavirus pandemic, when casinos were largely shut down, they continued to pay their rent.
That's highly likely to be the normal outcome in the next market and/or economic downturn because casinos are highly regulated assets, and an operator wouldn't easily give up access to such an important part of its business. Add in a well-above-market 5.4% yield, and you can see why an investor might like to own Vici Properties.
2. Realty Income kept paying even through the Great Recession
Next up is Realty Income, one of the largest net lease REITs on Earth. It has increased its dividend annually for 30 consecutive years. That includes hikes through the dot-com crash, the Great Recession, and the coronavirus pandemic. However, the really interesting one is the Great Recession because occupancy never fell below 96% despite the fact that Realty Income is heavily focused on retail assets (around 75% of rents). This is a highly reliable dividend stock.
There are a few key facts to know about its business. For starters, it has a huge portfolio with over 15,600 properties. Second, it is geographically diversified, with assets in North America and Europe. And third, it is financially strong thanks to an investment-grade-rated balance sheet. Put it all together, and this giant net lease REIT has advantaged access to capital, multiple levers for growth, and the size to make deals (including buying entire companies) that its peers couldn't manage. All of that, plus a 5.6% yield, should make Realty Income very popular with dividend investors.
3. Federal Realty is the only Dividend King REIT
Federal Realty's claim to fame is its dividend consistency. It has increased its dividend every single year for 57 consecutive years, making it the only REIT that is a Dividend King. That takes the dividend streak all the way back to the late 1960s, which means it managed to increase dividends even during the hyperinflation of the 1970s. The company owns strip malls and retail-focused mixed-use assets.
What sets Federal Realty apart from its peers is its size. Unlike Realty Income, however, this Dividend King is smaller than its closest competitors, with a portfolio of only around 100 assets. It focuses on quality over quantity, noting that its properties have higher average population densities around them and higher average incomes than its peer group.
There's one more important factor here. Federal Realty is an active manager of its assets, buying, redeveloping, and selling properties on a regular basis. Downturns often end up being an opportunity for management to upgrade its portfolio because sellers are willing to give it good deals. During the coronavirus pandemic, for example, Federal Realty bought its way into a new market, Arizona.
So, not only can investors collect the attractive 4.7% dividend yield today, but a deep downturn could end up being a chance for Federal Realty to improve its growth prospects.
You can't control the market, so control what you can
The Stoics will tell you that you can only control one thing: your thoughts. That's important to consider as you watch the market gyrate violently. You can't control those movements. You can only prepare as best as possible and then live through it.
Preparing, however, could simply be the perceptual shift you need to live through it, with dividend stocks like Vici, Realty Income, and Federal Realty helping you focus on something (dividends) other than market volatility. And that can make all the difference to your mental state in times like these.
Should you invest $1,000 in Realty Income right now?
Before you buy stock in Realty Income, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $532,771!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $593,970!*
Now, it’s worth noting Stock Advisor’s total average return is 781% — a market-crushing outperformance compared to 149% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of April 21, 2025
Reuben Gregg Brewer has positions in Federal Realty Investment Trust and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.
