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July''s 5 Dividend Growth Stocks With Yields Up To 7.96%

July's Top Dividend Growth Stocks Offering Yields Up to 7%

In the ever-evolving landscape of dividend investing, July presents a compelling array of opportunities for income-focused investors seeking both reliable payouts and potential for long-term growth. As markets navigate economic uncertainties, including inflation pressures and interest rate fluctuations, dividend growth stocks stand out as resilient assets. These are companies that not only provide consistent dividends but also demonstrate a commitment to increasing those payouts over time, often outpacing inflation and delivering compounded returns. This month, we've identified five standout dividend growth stocks that offer yields ranging from approximately 4% to 7%, making them attractive for portfolios aiming for both income and capital appreciation. These selections are drawn from a careful analysis of financial health, dividend history, sector stability, and growth prospects. They span diverse industries, including real estate investment trusts (REITs) and business development companies (BDCs), providing diversification benefits. Let's delve into each one, exploring their business models, dividend track records, valuation metrics, and why they merit consideration in July.

Starting with Realty Income Corporation (O), often dubbed the "Monthly Dividend Company," this REIT has built a reputation as a cornerstone of dividend reliability. Realty Income specializes in single-tenant, net-lease retail properties, leasing to essential service providers like pharmacies, dollar stores, and convenience outlets. This business model ensures steady cash flows, as tenants handle most operating expenses, including maintenance and taxes. The company's dividend yield currently hovers around 5.5%, which is particularly appealing in a market where bond yields remain volatile. Realty Income has an impressive streak of 29 consecutive years of annual dividend increases, with a compound annual growth rate (CAGR) of about 4.5% over the past decade. This consistency is underpinned by a payout ratio of around 75% of adjusted funds from operations (AFFO), leaving ample room for future hikes. In terms of growth, Realty Income has expanded its portfolio aggressively, recently acquiring properties in Europe and diversifying into data centers and gaming facilities. Analysts project AFFO per share to grow by 5-7% annually, driven by rent escalations and strategic acquisitions. Valuation-wise, the stock trades at a forward price-to-AFFO multiple of about 14x, which is reasonable compared to historical averages and peers. Risks include sensitivity to retail sector disruptions, but the focus on recession-resistant tenants mitigates this. For investors, Realty Income represents a defensive play with monthly dividends that can compound effectively in tax-advantaged accounts.

Next up is VICI Properties Inc. (VICI), a REIT focused on experiential real estate, particularly in the gaming and hospitality sectors. Formed from the spin-off of Caesars Entertainment's properties, VICI owns iconic assets like the Venetian Resort in Las Vegas and MGM Grand. Its triple-net lease structure mirrors Realty Income's, shifting operational risks to tenants and ensuring predictable income streams. With a current yield of about 5.8%, VICI appeals to those seeking higher income without excessive volatility. The company has raised its dividend annually since its inception in 2018, achieving a CAGR of over 8%, supported by a conservative payout ratio of around 70% of AFFO. Growth catalysts include ongoing expansions in the gaming industry, such as new resort developments and the integration of sports betting. VICI's portfolio is geographically diverse, spanning 10 states, and benefits from long-term leases with built-in rent escalators. Financially, the company maintains a strong balance sheet with a debt-to-EBITDA ratio below 5x, providing flexibility for acquisitions. Shares are valued at a forward AFFO multiple of 13x, suggesting undervaluation relative to the broader REIT sector. Potential headwinds include regulatory changes in gaming or economic downturns affecting travel, but VICI's essential entertainment focus has proven resilient, as evidenced by quick recoveries post-pandemic. This stock is ideal for growth-oriented dividend investors betting on the rebound of leisure and tourism.

Shifting gears to EPR Properties (EPR), this REIT targets experiential properties beyond just gaming, including movie theaters, ski resorts, and family entertainment centers. EPR's niche in "eat, play, live" assets positions it uniquely in the REIT space. Offering a robust yield of around 7%, one of the highest in this group, EPR attracts yield hunters while promising growth. The company suspended dividends briefly during the COVID-19 crisis but has since reinstated and increased them, with a current annualized payout showing commitment to recovery. EPR's dividend growth rate has averaged 5% annually pre-pandemic, and management aims to return to that trajectory as occupancy rates climb back to 95%+. The payout ratio stands at about 80% of AFFO, indicating sustainability. Growth drivers include portfolio repositioning, such as converting underperforming theaters into mixed-use developments, and capitalizing on the resurgence of in-person entertainment. EPR's balance sheet is solid, with liquidity exceeding $1 billion, enabling opportunistic buys. Valuation at 10x forward AFFO appears discounted, reflecting lingering pandemic scars but also upside potential. Risks are tied to consumer spending on discretionary activities, yet diversification into education and wellness properties adds stability. EPR suits aggressive investors willing to tolerate some volatility for higher yields and recovery-driven appreciation.

Main Street Capital Corporation (MAIN) brings a different flavor as a BDC, providing debt and equity financing to lower middle-market companies. This structure allows MAIN to generate high yields through interest income and equity upside. With a yield of about 6.5%, including regular and supplemental dividends, MAIN stands out for its monthly payouts and consistent growth. The company has increased dividends for over a decade, with a CAGR of 3-5%, backed by a payout ratio of 70-80% of distributable net investment income. MAIN's portfolio is diversified across industries like manufacturing, services, and technology, with a focus on recession-resistant businesses. Recent performance shows net asset value (NAV) growth, driven by strong underwriting and low default rates. Analysts forecast 5-7% annual dividend growth, supported by portfolio expansions and fee income. Trading at a slight premium to NAV (around 1.1x), MAIN's valuation reflects its premium management and track record. Risks include economic sensitivity of portfolio companies, but MAIN's conservative leverage (debt-to-equity below 1x) provides a buffer. This stock is perfect for income seekers interested in private market exposure without direct involvement.

Finally, Agree Realty Corporation (ADC) rounds out the list as a retail-focused REIT similar to Realty Income but with a twist: it emphasizes ground leases and development projects. ADC leases to top-tier retailers like Walmart and Tractor Supply, ensuring high credit quality. Yielding about 4.5%, it's on the lower end but compensates with strong growth potential. ADC boasts 11 consecutive years of dividend increases, with a 5% CAGR, and a low payout ratio of 65% of AFFO, signaling room for acceleration. The company has grown its portfolio by 15% annually through acquisitions and developments, focusing on e-commerce-resistant sectors. Its balance sheet is pristine, with minimal debt maturities and high liquidity. Valued at 16x forward AFFO, ADC trades at a premium but justifies it with superior growth metrics. Risks involve retail evolution, but ADC's adaptive strategy, including build-to-suit developments, positions it well. This is a solid pick for conservative growth investors.

In summary, these five stocks—Realty Income, VICI Properties, EPR Properties, Main Street Capital, and Agree Realty—offer a balanced mix of yield, growth, and stability for July portfolios. With yields up to 7%, they provide income in a low-rate environment while their dividend growth histories suggest inflation-beating potential. Investors should consider factors like sector exposure, risk tolerance, and overall market conditions. Diversifying across these names can enhance portfolio resilience, but as always, thorough due diligence is essential. Whether you're building a retirement nest egg or seeking supplemental income, these dividend growth champions warrant a closer look this month. (Word count: 1,128)

Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/article/4802341-july-5-dividend-growth-stocks-with-yields-up-to-7-percent ]