Real estate investment trusts, or REITs, are generally excellent dividend stocks, with most offering dividend yields significantly greater than the average S&P 500 stock. However, not many yield more than 5%, and when you get into higher yields like this, it's important to be selective.
Fortunately, some superb REITs fall into this high-yield category. These three in particular yield more than 5% and have lots of room to grow.
A less-expensive way to invest in data centers
Iron Mountain (NYSE: IRM) has some impressive businesses under its umbrella. Its core business is document storage, which involves housing sensitive records for corporations and other clients.
This business is essentially a monopoly in the industry, serving 225,000 customers -- including 95% of the Fortune 1,000 -- in more than 1,400 storage facilities with about 730 million cubic feet of storage volume worldwide.
And the most visible part of the company (at least to most Americans) is Iron Mountain's mobile-document shredding service. The problem is the world is going digital, and these businesses will slowly but surely decline over time. However, Iron Mountain is pivoting to digital records security.
The company has been quietly building a portfolio of data centers and now owns 15 operating facilities. Currently, data centers account for just 7% of Iron Mountain's business, but the company has made it clear that this is their area of focus, as it sees a $20 billion addressable market opportunity in the data center portion of the business alone.
With a much lower valuation than other data center REITs, Iron Mountain could be a long-term bargain if it can replicate its physical-records success in the digital world. And in the meantime, you'll get a 6.6% dividend yield.
A lower-risk approach to a growing market
There's a clear trend toward legalized gaming in the United States, but the reality is casino stocks are simply too volatile for many investors. And if this is the case for you, it might be smart to look at a REIT specializing in casino properties, such as Gaming and Leisure Properties (NASDAQ: GLPI), which pays a 5.8% dividend yield as of this writing.
Gaming and Leisure Properties spun off from Penn National Gaming (NASDAQ: PENN), so it's no surprise Penn is still its top tenant. Though, among the portfolio of 52 properties, you'll also find gaming venues operated by Caesars Entertainment (NYSE: CZR), Boyd Gaming (NYSE: BYD), and others.
The key point for dividend investors is that the REIT doesn't rely on the casino or hotel revenue to make money. Rather, Gaming and Leisure Properties establishes long-term property leases with the gaming companies that operate them and collects a predictable and growing stream of rental income.
Thus, this could be a great way to gain exposure to the long-tailed growth potential of the gaming industry, but without nearly as much volatility.
Resilient properties and long-term growth
It's tough to make the case that there is any type of commercial real estate more resilient than healthcare properties. Healthcare is an essential business that typically does just as well during recessions, and the properties are generally on long-term net leases and tend to keep their tenants even beyond their lease terms.
And that's why dividend seekers should have National Health Investors (NYSE: NHI) -- which has a 5.3% yield at the current stock price -- on their radar. National Health Investors owns a portfolio of 242 properties, operated as partnerships with about three dozen different partners.
In addition to various senior-focused properties, about three-fourths of the REIT's portfolio is skilled nursing facilities. The 85-and-older population in the United States (the target demographic for skilled nursing and senior housing) is expected to increase by more than 80% by 2035, ensuring demand will continue to grow for decades to come.
The Millionacres bottom line
These stocks can be excellent ways to get solid growth and income in your portfolio for many years. While these REITs certainly aren't without risk, they are three well-run businesses with solid cash flow and large market opportunities, and I'm confident that investors who buy and hold will be glad they did.