High dividends are great, but high dividends that are safe and sustainable are even better. And safe, high dividends paid by companies with tons of long-term growth potential is a winning combination that can make you rich over time. With that in mind, here are three excellent real estate stocks, all with dividend yields over 5%, that could deliver excellent total returns in your portfolio over the long run.
Medical offices belong in your portfolio
There are few types of real estate that are in the same league as medical offices when it comes to resilience in tough times. Not only are medical offices generally leased on a long-term basis to tenants (really, how often does your doctor's office move?), but healthcare is about as essential of a service as you can find.
Physicians Realty Trust (NYSE: DOC) is a fantastic way to get exposure to medical office real estate in your portfolio. The company owns a portfolio of 275 medical office properties, most of which are affiliated with major health systems. The stock currently yields 5.2%, and the payout is well covered by the company's profits.
What's more, medical office real estate is a huge opportunity. Physicians Realty Trust estimates that there are at least $250 billion worth of properties it could potentially acquire, and less than 10% of medical office properties are currently owned by real estate investment trusts (REITs). With a flexible balance sheet to pursue opportunities, Physicians Realty Trust could have decades of strong growth ahead of it.
A hospitality REIT with a twist
MGM Growth Properties (NYSE: MGP) is technically a hospitality REIT, with 15 gaming hotel properties in its portfolio, including iconic Vegas properties such as MGM Grand, Mirage, and Mandalay Bay, just to name a few. But unlike most hospitality REITs, which depend on daily room revenue and food and beverage sales, MGM Growth Properties leases its properties to a single operating tenant, rock-solid gaming company MGM Resorts (NYSE: MGM), on a long-term, triple net basis.
While its relationship with MGM gives it a nice built-in growth mechanism, MGM Growth Properties is thinking bigger. It plans to branch out to gaming properties operated by other tenants, as well as non-gaming properties in the retail, hotel, leisure, and entertainment sectors. The company sees potential to grow its net operating income (NOI) to more than ten times its current level over the long run. So, not only does MGM Growth Properties pay a generous 6% dividend yield, but it has tremendous long-term growth potential as well.
Much more than its legacy business
Iron Mountain (NYSE: IRM) is the undisputed leader in records management. When it comes to storage of paper records, it is in a class by itself, serving 95% of the Fortune 1000 at its roughly 1,450 storage facilities. And if you live near a business district, there's a good chance you've seen one of Iron Mountain's mobile document-shredding trucks driving around.
The problem is that while it won't happen overnight, documents are slowly but surely going digital, and Iron Mountain's core business is likely to decline over time. The good news is that Iron Mountain's management understands this and is gradually transitioning its focus to digital records. For example, Iron Mountain has been quietly building a portfolio of data centers, and with a brand name that is synonymous with "records security," Iron Mountain could become a big player in the digital transformation of record keeping. And with the highest (6.7%) dividend yield of the three stocks discussed here, its investors will be paid handsomely as they watch the transformation unfold.
The Millionacres bottom line
All three of these stocks have an excellent combination of income and long-term growth potential, which can be an excellent combination for building wealth. All three are focused on different subsectors of real estate, so take a closer look at one (or more) that could be a good fit in your portfolio.