2 Great Dividend REITs Every Investor Should Know

Dividend investing is a great way to build income with relatively little risk. REITs are a common choice for dividend investors, and they are perfect for this type of investing. But beware, you need to choose carefully!

There are a plethora of REITs on the market. Some, however, stand out a bit from the rest. One of them may be the well-known $O, which forms the basis of many investors' portfolios. The other one I've picked today $AMT, which is more expensive, but has an absolutely incredibly brilliant business model and an unwavering entrepreneurial spirit that makes it an absolutely perfect company.

Realty Income Corporation $O

Realty Income Corporation is an American real estate investment company founded in 1969. It focuses on commercial real estate investments with long-term leases. The company owns and manages over 6,500 commercial properties in 49 US states and Puerto Rico. Clients include major retail chains such as 7-Eleven, CVS, Dollar General and Walgreens. The company has paid shareholders a stable and growing monthly dividend since 1969.

Future priorities are to continue to grow the portfolio by 50-100 properties per year and increase the monthly dividends. The company has had steady value growth even in times of economic crisis due to long-term contracts with tenants.

$O s 20-year dividend history is truly impressive. Source

It has declared 632 consecutive monthly dividend payments, with a total of 119 dividend increases since 1994 .

This track record is due to a focused and careful approach to managing the business. With a market capitalization in excess of $41 billion, it easily outperforms its closest competitors. The company's history and its enormous scale give it substantial advantages.

For example, it generally has easier access to cheap capital in both the equity and debt markets. It can also make larger acquisitions than its competitors. And it generally has greater bargaining power when it comes to spending money, for example on property renovations. All this gives it an edge over its competitors. These are advantages that are often gained by giants in the industry, be it REITs, consumer goods, industrial companies, etc. On the other hand, being a giant can be a problem.

Because of its scale, Realty Income cannot be as nimble as its peers. Buying small, one-off properties, even if they are great investments, just doesn't pay off. A more modest REIT with net rents can quickly adapt to the market environment and cherry-pick such opportunities for the benefit of its shareholders. Realty Income must seek out great deals, and great deals often require the purchase of real estate portfolios that include both desirable and less desirable assets.
Either way, Realty is a great company. Unfortunately, investors know this and that's why $O is valued really high. Whether it is currently a bargain purchase is for each individual to consider.

American Tower Corporation $AMT

AMT American Tower Corporation is one of the world's leading providers of wireless network infrastructure. The company owns, develops and operates primarily communications towers and masts in the United States and abroad.

The company has stable cash flow and has experienced long-term growth due to the growing demand for mobile data. The company is majority owned by the Crown Castle International fund.

Data usage is projected to grow 20% annually through 2028. In addition, operators such as American Tower are benefiting from the continued rollout of 5G technology domestically and internationally. The REIT has recently faced short-term headwinds due to currency fluctuations and rapidly rising interest rates, which are impacting borrowing costs.

A dividend payout ratio of 67% means the company is more than capable of sustaining dividends even in a challenging macroeconomic environment. It has a stable gearing ratio of 5.4 times earnings before interest, tax, depreciation and amortisation (EBITDA) and is actively working to reduce its exposure to floating rate debt to reduce the impact of rising interest rates.

But importantly, AMT also has a huge moat. AMT owns and operates hundreds of thousands of communications masts for mobile operators and other telecommunications companies. These masts are used to house antennas and receivers for wireless technologies like LTE, 3G, 2G and Wi-Fi. It is actively investing in new construction, expansion and upgrades to its network of masts and other communications facilities to ensure that this infrastructure meets growing global demand.

AMT's primary business model is to lease space and frequencies on their infrastructure to mobile operators, telecommunications companies and other entities.

Unfortunately, as with Realty, the quality of this company is already priced in.

Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.