Share Prices Down. Payouts Up. Time to Buy These 3 Dividend Machines

It's a great time to be an income-focused investor. Most stock prices are still down, driving up the yields on those that pay dividends. Meanwhile, many companies have provided an additional boost to their yield by increasing their payouts. 

Three top-notch dividend stocks offering attractive yields these days are Prologis (PLD)American Tower (AMT), and Kimco Realty (KIM). Here's why these contributors think these dividend machines are great buys right now. 

Prologis is priced right for building your own dividend supply chain.

When Prologis upped its dividend by 10% on Feb. 23, that just confirmed this giant real estate investment trust's (REIT) status as a rock-solid choice for investors looking at passive income stocks.

Prologis has a market cap of about $114 billion, making it one of the largest REITs in the world. Its portfolio of about 5,500 facilities and 1.2 billion square feet serves some 6,000 customers in 19 countries makes it one of the largest warehouse and distribution logistics providers on the planet, too.

When you're as big as Prologis, you can also fund your own research department, and theirs has painted a pretty picture for the industrial REIT sector as a whole. In its 2023 supply chain predictions, Prologis sees U.S. warehouse development starts dropping to a seven-year low, while e-commerce leasing worldwide sees its second-most active year on record.

There's more, but the point is that the business imperatives that have driven record rent growth — expected to exceed 10% again this year — will continue to keep supply chains and warehouses full. That, and those long-term leases and worldwide presence commanded by Prologis, also should keep the bottom line and dividends rising.

Prologis' stock is more than 25% lower than the record high it hit last spring, and while it won't necessarily reach that mark again anytime soon, you can still enjoy a very reliable yield of about 2.8% at a share price of about $121. That comes with an average analyst target price of $145 and more than a decade of annual dividend increases, too.

Up to its highest yield this decade

American Tower has increased its dividend by 12.5% over the past year. Despite that surging dividend payment, the infrastructure REIT's shares have tumbled about 30% from their peak last year. With shares down and the payout up, American Tower now yields about 3%. That's right around its highest level in the past decade:

AMT Dividend Yield Chart

Although American Tower is facing some headwinds this year that will limit its earnings growth, the REIT expects to increase its dividend by another 10%. The company can easily afford to continue increasing its dividend because it has a relatively low dividend payout ratio for a REIT. 

More dividend growth seems likely in the future. Data usage continues to surge, driving the need for additional infrastructure. That should increase the utilization of the company's existing assets and allow it to continue investing capital in building additional capacity. It's investing about $1.7 billion this year on capital projects.

That money will enable it to build about 4,000 new international tower sites and modestly expand its data center capacity. Those investments should increase its cash flow in the future, giving it the funds to continue increasing its dividend.

With its best dividend yield in a decade and more growth ahead, American Tower looks like an extremely attractive investment opportunity right now.

This stock hiked its dividend every quarter 

Kimco Realty is an operator of open-air, supermarket-anchored shopping centers, as well as mixed-use properties. As of Dec. 31, the company operated 532 shopping centers with 90.8 million square feet of gross leasable area in 28 states. The company focuses on developing in suburbs in the Sun Belt and coastal areas that have strong fundamentals such as population growth, barriers to entry, and attractive demographics.

The company's biggest tenants include TJX Cos., parent of retailer T.J. Maxx, Home Depot, Ross Stores, and Albertsons. The tenant base is relatively diversified, and no one tenant accounts for more than 1.3% of rent.

Discount department stores and supermarkets are considered relatively defensive retailers. In other words, when the economy weakens and consumers pull back on spending, they are more likely to avoid discretionary stores that sell upscale apparel and electronics, but they still buy food and less expensive apparel.

Home improvement should benefit from the real estate market's affordability issues. Many homeowners who want to move up to a better property may find it easier to take out a home equity loan and remodel or put on an addition. 

Although occupancy is not back to its pre-pandemic level of 96.4%, it is still improving and stood at 95.5% at the end of 2022. Like most REITs, Kimco has struggled over the past year, beset by rising interest rates. That said, the company has been hiking its dividend — in fact, it hiked its dividend every quarter in 2022.

In another sign of strength, Kimco reported that per-share funds from operations — a key measure of REIT performance — rose 13.6% to $1.58. At current levels, the stock has a dividend yield of 4.5%.

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Originally published on

Brent Nyitray, CFA has no position in any of the stocks mentioned. Marc Rapport has positions in Prologis. Matthew DiLallo has positions in American Tower, Home Depot, and Prologis. The Motley Fool has positions in and recommends American Tower, Home Depot, and Prologis. The Motley Fool recommends Tjx Companies. The Motley Fool has a disclosure policy.