The goal of investing is to increase your wealth over time. Growth stocks are a great way to do this, but income stocks are also valuable moneymakers over long periods. Thanks to the power of dividends and share price appreciation over time, a small investment today could earn you a lot more income in the future.
Two great dividend stocks that have a long track record of dividend growth and high yields are Blackstone (BX 0.28%) and Gladstone Commercial (GOOD -0.96%). Both stocks are down about 30% during the past year, meaning a $3,000 investment split between these high-yield stocks could net you more than $200 per year — about three times more than a $3,000 investment in the S&P 500 index would net you.
Here’s a closer look at each company, and why these Motley Fool contributors believe they are fantastic income buys today.
Earn top-tier income from a top-tier stock
Liz Brumer-Smith (Blackstone): Blackstone is the largest alternative asset management company in the world, managing just over $951 billion for wealthy individuals, insurance companies, and institutional investors. The company invests that money in alternative assets like renewable power, life sciences, real estate, debt equities, and other asset classes.
Blackstone has had a tough year. General market volatility pushed its share price down notably in 2022. But recent concern over a spike in redemption requests from its private real estate investment trust (REIT), BREIT, puts the stock near its 52-week low.
Despite its beaten-down share price, the company is performing incredibly well. Its assets under management grew by 30% year over year while its fee-related earnings increased by 51%. Interest in the alternative investment avenue has grown steadily over the past decade as investors look for new ways to beat the market. That demand should continue growing, particularly if the economy continues to battle high inflation or trips into a recession.
Blackstone has more $182 billion ready to deploy on opportunistic investments, giving it huge potential to deliver healthy returns for its investors in the coming years. And its financial profile couldn’t be stronger. It has enough cash to pay off all of its debt and still have $9 billion left over to keep investing.
Its shares trade at around $85 at the time of this writing, meaning a $1,500 investment would net you roughly $87 in annual dividends based on dividends paid in 2022. Blackstone isn’t super consistent in the dividends it pays each quarter since the company distributes dividends based on its recent performance. This helps it maintain a healthy dividend payout ratio while still keeping its total yield within the 4% to 6% range historically.
Blackstone is the stock I was most excited about purchasing in 2022. I plan to use 2023 for more buying opportunities in this top-tier dividend stock.
Gladstone Commercial continues to deliver monthly
Marc Rapport (Gladstone Commercial): Plunk down a $1,500 investment in Gladstone Commercial at the share price of $16.85 as of this writing and you can earn about $133 a year, or almost 8% — a nice yield that’s pretty reliable, considering that’s been about the level this REIT has been paying for more than a decade.
Gladstone Commercial is a mixed-use REIT that’s currently about 55% industrial and 42% office. It continues to shift away from the latter and toward the former, as it builds on a record of never cutting its dividend since it went public in 2003.
Gladstone Commercial invests in single-tenant and anchored multi-tenant net-leased properties, with a diversified mix of tenants, including manufacturers and logistics providers and big names such as General Motors, Verizon, Morgan Stanley, and Iron Mountain among its largest tenants.
In a Jan. 5 update, the trust said it bought 13 industrial properties in 2022, sites with an average remaining lease term of 14.5 years, while selling two office properties. It also said that lease collections were 100% for the fourth quarter and that its portfolio at year’s end was 96.8% occupied.
That gives the company a portfolio of 137 properties in 27 states, diversified by geography — ranging from 15% in the Northeast to 38% in the Southeast — and by industry. No tenant accounts for more than 4% of the rent roll and the automotive industry is the largest sector, at 14% of the rent.
Another nice feature for income investors is that Gladstone Commercial pays monthly. That $1,500 stake as of this writing would buy 89 shares that pay $0.1254 per share per month. That’s good for $11.16 per month. Analysts who follow the stock rate it a buy with a target price of $22, pointing to potential upside there as well. I consider this stock a buy, too, and have owned it for a while, adding to it regularly when I can.
Liz Brumer-Smith has positions in Blackstone and Iron Mountain. Marc Rapport has positions in Gladstone Commercial and Verizon Communications. The Motley Fool has positions in and recommends Blackstone and Iron Mountain. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.