The U.S. economy is growing nicely, with any recession at least a few years out in the future. Average wages for working folks are also starting to increase after years of stagnation. Confidence in the economy and more money in their pockets will have people more willing to spend on recreation activities. Now is a good time to consider income stocks backed by consumer discretionary spending, especially for recreation activities.

Real estate investment trusts (REITs) own a wide range of property types lease the many kinds of businesses. It is often financially more efficient for a retail or services business to lease property or buildings rather than own them. REITs typically specialize in a specific property type. This gives them expertise to generate superior returns and often help their tenants be more successful in their own businesses. As noted above, this is a good time to look at REITs with properties used in the recreation and leisure industries.

Here are three specialty REITs focused on gaming and other recreation activities.

VICI Properties, Inc. (NYSE: VICI) was spun-off by Caesars Entertainment (Nasdaq: CZR) with an October 2017 IPO. The company’s portfolio includes 20 market-leading gaming properties in nine states, including the world-renowned Caesars Palace, and four championship golf courses. The properties are leased to Caesars Entertainment Corporation and operate under leading brands such as Caesars, Horseshoe, Harrah’s and Bally’s.

Caesars doesn’t not have an ownership position in VICI and there are no Board members common to both companies. With the spin-off, VICI is completely independent. Caesars does provide very strong 3.6 times rent coverage on the properties and contracted capex spending commitments to keep the properties at the forefront of the gaming industry. The REIT is internally managed. For growth VICI has rights of first offer (ROFO) on properties Caesar would want to capitalize through a sale lease back. The REIT can also pursue third party acquisitions.

Two dividends have been paid, with a 9.5% increase between the first and second.

The shares currently yield 4.9%.

MGM Growth Properties LLC (NYSE: MGP) was spun-off in April 2016 by MGM Resorts International (NYSE: MGM) in April 2016. The REIT currently owns 11 properties leased to and managed by MGM. All the properties are on a single master-lease, which gives the rental payments to MGM Growth Properties the highest level of safety. The lease has built in annual escalators and a profit-sharing component.

In contrast to VICI, MGM retains a majority ownership in MGP and pays all the operating expenses of the REIT. MGP also has ROFO on properties owned by MGM. The REIT has already made third party acquisitions.

In its history, MGP has produced steady 10% per year dividend growth.

The shares yield 5.9%.

EPR Properties (NYSE: EPR) was founded in 1997 as a pure play owner of movie theater properties. Today the company 169 multiplex theater and family entertainment centers generating $280 million of annual net operating income, 80 golf entertainment complexes, ski areas, and other entertainment attractions producing $182 million of NOI, and 146 charter and private schools generating NOI of $115 million.

The EPR management team has great expertise in its focused property areas and helps tenants be as profitable as possible. All properties are leased to tenants on triple-net contracts. The EPR dividend has grown every year since 2010 with a 7% compound annual growth rate.

Dividends are paid monthly, and the yield is 6.1%.

The power of a dividend focused investment strategy is the ability to build a portfolio with an attractive current yield and have the income stream grow over time. Many dividend stocks have histories of regular dividend increases. You can put some extra pop into your brokerage account values by purchasing shares of growing dividend stocks before they come out with their next dividend increase announcement.

The real estate investment trust (REIT) sector includes many companies that pay growing dividends and their shares have attractive yields. Most REITs announce a new, higher dividend rate once a year and then pay the new rate for the next four quarters. I maintain a REIT database that includes the timing of when the companies typically announce dividend increases as a data point for each REIT. The month before the next expected dividend increase announcement, is a good time to buy or add shares of a REIT that you expect to announce a higher dividend rate.  When the market sees the higher rate, the share price often moves higher, and the result can be a nice short-term gain to the upside. You can use this information to either buy shares to hold for the longer term or as an intermediate term trade with the goal of making a profit on the typical high single digit to low double-digit share price gain that often comes with a higher dividend announcement. In many cases the share price will continue to appreciate until just before the next ex-dividend date.

There are REITs that make their annual dividend increase announcements in every month of the year. The majority cluster in the last quarter or the first couple of months of the new year.

As we move into October, there will be more opportunities to make this type of investment. Also, since in recent years September has been very volatile, you may be able to time your purchases to pick up shares when the overall market is in a down period.

Let’s take a look at four REITs that should announce dividend increases in October.

Iron Mountain Inc. (NYSE: IRM) is a niche REIT that provides information and asset storage, records management, data centers, data management and secure shredding services. The company has facilities and provides services in Asia, Europe, Africa and South America as well as in North America.

The company converted to REIT status in 2014 and has increased the dividend each year since. Last year the payout was boosted by 6.8%. FFO per share growth has slowed in 2018, with management guiding to 4% dividend growth for the next several years.

Iron Mountain announces its new dividend rate at the end of October with a mid-December record date and end of the year payment.

IRM yields 6.4%.

Brixmor Property Group (NYSE: BRX) is an owner and operator of high-quality, open-air shopping centers. The Company’s more than 500 retail centers located primarily located in the eastern one-third of the continental U.S.

Brixmor went public in late 2013 and has increased its dividend each year, with typical 5% to 6% increases. Last year the dividend rate was boosted by 5.6%. The current dividend rate is less than 55% of the trailing twelve month’s FFO per share. I expect another 6% increase to be announced in late October. The new dividend rate is for the following year, with the first record and payment date of the higher rate occurring in January.

BRX currently yields 6.0%.

Crown Castle International Corp (NYSE: CCI) owns cell phone towers, which are leased by the various wireless services providers. The company is the nation’s largest provider of shared wireless infrastructure.

Crown Castle converted to REIT status in September 2013 and at that point started to pay dividends. Since the conversion, an increase was not announced for just one year: 2016.

In 2017 the dividend was boosted by10.5%. For 2018 management has guided to 10% per share AFFO growth, which means the next dividend increase should also be close to 10%. Crown Castle has announced a new higher dividend around the 20th of October with the record and payment dates in the last half of December.

CCI yields 3.7%.

Macerich Co (NYSE: MAC) focuses on the acquisition, leasing, management, development and redevelopment of regional malls throughout the United States. Currently the company owns 48 “market dominant” Class A malls located across the U.S. Macerich has paid a growing dividend for over 20 years.

Last year the quarterly payout increased by 4.2%. Management guidance is for 2018 funds available for distribution per share to be flat compared to last year. However, the current dividend rate is just 7% of projected FFO, and management is committed to continuing the annual dividend growth. I expect a moderate 3% to 4% dividend increase to keep the growth streak alive.

A new dividend rate is usually announced in late October with a mid-November record date and early December payment date.

MAC yields 5.2%.

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As the stock market indexes continue with history’s longest bull market, investors are becoming concerned that the bull is on its last legs and they need to start preparing for the next bear market. I am not predicting the end of the bear market. Nobody can. What you can do is start to add stocks to your portfolio that are more resistant to economic recession and stock market bear markets.

It’s important to understand that a stock market bear market will take down the value of all stocks, with very few exceptions. The companies you want to own are the ones whose businesses will continue to operate, generate strong revenue, and grow through a recession or bear market. These companies can continue to pay dividends and the share prices will recover after the down turn. You as an income focused investor continue to collect dividends while other investors worry about how they are going to recover from their losses.

Our search for recession/bear market resistant dividend stocks focuses on the business operations. We want companies whose operations should at least stay level and hopefully thrive in all economic conditions. These will be more conservative income stocks, with the trade off of lower current yields. Here are three for your further research.

More: Buy These 3 High-Yielders with Fast Growing Dividends and International Exposure

National Retail Properties, Inc. (NYSE: NNN) is a traditional triple-net lease REIT. The company owns over 2,800 (up by 300 in the last year) free-standing, single tenant retail properties. most of the REIT’s tenants are in business that cannot be hurt or replaced by online sellers.

The top types of businesses are convenience stores, casual and fast food restaurants, auto service shops, fitness outlets, movie theaters and auto parts stores. These are businesses that are recession resistant and would continue to make lease payments through an economic downturn.

NNN is a Dividend Aristocrat and has increased its dividend for 29 consecutive years. You can count on dividend increases of about 4% each year.

The current dividend is 72% of FFO and the yield is 4.3%.

Physicians Realty Trust (NYSE: DOC) is a healthcare REIT that focuses its portfolio on medical office, physician group practice clinics, outpatient care, ambulatory surgery centers, specialized hospitals, rehabilitation facilities and small specialized long-term acute care hospitals. The company owns 249 properties located in 30 states. Ninety-two percent of the holdings are medical office buildings. Even through tough economic times, the healthcare sector will still need its offices and care facilities.

Unlike many REITs in the healthcare sector Physicians Realty Trust avoids the more economically sensitive senior living type of facilities. This REIT’s business operations produced highly stable cash flow which allows you to count on the dividend through any economic downturn.

Current yield is 5.25%.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.

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My 36 Month Accelerated Income Plan is a guide for individuals who see retirement looming in a few short years and who want to build up their retirement savings as much as possible. The plan provides a systematic approach that can be started at any time and does not require timing the market. A recent subscriber question about picking three stocks to start her 36 Month Accelerated Income Plan was the catalyst for this article.

The plan is based on using dividend reinvestment of high yield stocks. After a decade of very low interest rates from most types of income assets, the investing world has lost touch with the power of compound growth when the yields are high enough. The 36 Month Accelerated Income Plan uses high yield stocks and automatic reinvestment of dividends to quickly grow the income potential of money you have set aside for income in your retirement years.

One example used in the 36 Month Accelerated Income Plan shows how a $150,000 starting amount could be producing a monthly income of $3,300 after just three years. That’s $39,600 in annual income. Here are some of the success factors that you need to keep in mind and employ.

• Higher yield is better. Compound growth is powered by yield. For example, $10,000 compounds to $11,600 in three years at 5%. It grows to $13,450 at 10%, a 115% gain in growth.
• The dividend payments from the selected stocks must be expected to continue for the three years and longer. This is the hard part of the strategy, and you may need to change stocks if individual company business results change.
• The plan focuses on compounding the income stream, not the account value. This means that temporary share price drops are a good thing, allowing you to buy more shares with the reinvested dividends when share prices are down, boosting your income at an even rate.
• The focus will be on the dividend income growth, which will become retirement income in the future. That income will compound even faster than your account value will grow.
• You can boost your retirement results by making regular added investments to your high-yield stock holdings.

To help you get started, here are three stocks with yields greater than 10% and a current positive outlook that the dividend rates will continue.

Uniti Group Inc. (Nasdaq: UNIT) is a real estate investment trust (REIT) that owns telecommunications network assets. The company was spun-off by Windstream (Nasdaq: WIN) in 2015 to own a large portion of WIN’s fiber and copper wireline network.

Since its IPO, UNIT has grown through the acquisition of additional fiber networks and cell tower assets. Controversy around how Windstream spun-out UNIT has lead to the current low share price/high yield of UNIT. Those problems should not affect UNIT and the current dividend rate is well covered by distributable cash flow.

The shares currently yield 11.6%.

New Residential Investment Corp. (NYSE: NRZ) is a finance REIT that owns a diversified portfolio of residential mortgage related assets. This has been one of the great high-yield investments of the last five years.

The company invests at the edges of the mortgage business including mortgage servicing rights and mortgage backed securities call rights.

Over the last few years, New Residential has expanded its ability to become a full service mortgage origination and servicing companies. These new capabilities have not yet made a meaningful difference to the business results, but they will.

The NRZ dividend has grown slowly and steadily. The stock currently yields 10.9%.

The InfraCap MLP ETF (NYSE: AMZA) is an exchange traded fund (ETF) that owns an actively managed portfolio of master limited partnerships (MLPs). The MLP sector is comprised of publicly traded partnerships that provide energy infrastructure services such as pipeline, storage terminals, export facilities and processing services.

AMZA boosts the already high yields of the MLP sector by selling call options on the fund’s portfolio holdings. The returns of AMZA have been comparable to other MLP focused funds. Admittedly, the sector has been in a bear market since early 2016 and is just recently started to recovery. The options selling supported high yield boosts the effect of dividend reinvestment with this fund, leading to outperformance when using a reinvestment strategy.

AMZA currently yields 16%.

High yield stocks come out of a range of different business sectors. You may be aware of business development companies (BDCs), real estate investment trusts (REITs), and master limited partnerships—MLPs. Also, on high yield investor radars will be closed-end funds (CEFs) and leveraged ETFs. For an attractive yield combined with a high level of safety, the best high yield stocks come from a subsector of a subsector of one of these three letter descriptors.

REITs operate under a pass-through tax rule that allows a company to not pay income taxes if its business involves the ownership or financing of real estate and at least 90% of net income is paid to investors as dividends. The REIT sector can be divided into equity REITs and finance REITs. Equity REITs are companies that own commercial real estate. These companies usually specialize in a specific type of property such as healthcare, hotels, office buildings, warehouses, and apartments.

Finance REITs operate on the lending side of real estate. A finance REIT may be a lender or just a company that owns a portfolio of mortgage backed securities (MBS). A lot of finance REITs will be a combination of originating new mortgages, packaging mortgages for sale and fee income, holding loans in a portfolio, and owning MBS.

Finance REITs separate into two categories. These companies typically focus on either the residential side of mortgage lending or on commercial property financing. The residential mortgage side takes a lot of interest rate risk to be able to turn 4% home loans into a 10% stock dividend yield. I am not a fan of this business model. The commercial mortgage REITs, on the other hand, give investors an attractive combination of high current yield and a financially conservative business model.

Commercial finance REITs have these attractive attributes:

• Commercial mortgages are written at low loan to value amounts. These companies typically have portfolios with an overall 65% LTV.
• Commercial mortgages are almost always adjustable rate. This means that if interest rates increase, so will the REIT’s interest income.
• Commercial property lending requires a high level of expertise and flexibility. This allows the REITs to generate higher yields on the loans they make.
• A commercial finance REIT can generate attractive yields on equity using a very moderate amount of leverage.

Here are three commercial finance REITs that will put some serious yield into your income portfolio.

Starwood Property Trust, Inc. (NYSE: STWD) is one of the largest commercial lenders of any business type – including banks. The company currently has a $12.6 billion loan portfolio with a 62% loan to value. Since launching in 2009 the company has put out almost $40 billion in loans and investments with zero realized losses.

In recent years, Starwood has acquired the largest commercial mortgage special servicer. This acquisition has produced growth in CMBS origination and investments. The company also owns a $2.7 billion equity commercial property portfolio that generates 9% to 12% cash on cash returns. Management constantly looks for investment opportunities both in and out of the commercial mortgage business.

STWD current yields 8.4%.

Ladder Capital Corp (NYSE: LADR) uses a three-prong approach to its investment portfolio. The three legs are commercial mortgage loans, which account for 75% of the company’s capital allocation; commercial real estate equity investments for 12%; and commercial MBS bonds accounting for 8%. The business plan is that the three groups shift as more or less attractive through the commercial real estate cycle. Leverage is a comfortable 2.7 times equity. Since it paid its first dividend for Q1 2015, Ladder has steadily increased the quarterly payout at an average 8% annual growth rate.

The shares currently yield 7.7%.

Blackstone Mortgage Trust, Inc. (NYSE: BXMT) is a pure commercial mortgage lender. The REIT receives high quality mortgage lending leads from its sponsor, The Blackstone Group L.P. (NYSE: BX).

As of its 2018 first quarter earnings, BXMT had a $12.1 billion portfolio of senior mortgage loans. 94% of the portfolio is floating rate. The loans were at 62% loan to the value of the underlying properties. In the first quarter the company originated $1.9 billion of new loans, while $900 million of principal was paid off. Leverage is 2.3 times debt to equity.

Blackstone management states that each 1% increase in LIBOR will grow annual net income by $0.24 per share. The stock currently yields 7.5%.

In recent months, I have added two newer, still in the growth phase, commercial mortgage REITs to my Dividend Hunter recommendations list. If you like the idea of high yield and growing dividends, check out a subscription for these two winners and more of my picks.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.

Source: Investors Alley 

In the IPO world, new biotech or consumer tech stocks get all the attention. The financial news keeps close track of how much a new tech IPO climbs the first few days after a public market launch. This makes great news bites, but it is hard for individual investors to participate. IPOs in the high-yield stock world get little or no attention. I make a point of finding and tracking new dividend stocks, and then recommending them to my subscribers when my analysis confirms attractive total return potential. One such stock has returned 50% since I made the first recommendation last Fall. The 2018 second quarter earnings show that the positive run still has plenty of room to grow.

With a transformative acquisition in 2016, Arbor Realty Trust Inc. (NYSE: ABR) became a “new” company as far as investment potential. In July 2016 the REIT acquired privately held Arbor Commercial Mortgage, LLC. The acquisition diversified the company’s revenue stream, primarily by bringing in a larger commercial mortgage servicing portfolio. When well managed a portfolio of mortgage servicing assets can generate tremendous returns.

One of my long time recommendations, New Residential Investments (NYSE: NRZ) has generated a 100% plus total return over the last four years by focusing on residential mortgage servicing rights.

After the transaction, Arbor management noted that the move “Transitioned the REIT from a mono line dependent entity into a fully integrated franchise with a significant agency origination business with high barriers to entry providing a natural limitation on competition.”

Related: Is This the Best High-Yield Stock?

The investment returns from ABR since mid-2016 have been spectacular. The quarterly dividend has grown 56% from $0.16 per share to the current $0.25 per share. The share price has appreciated by a comparable 60%. I first recommended this REIT to my Dividend Hunter subscribers in October 2017, and we caught most of the gains with the stock generating a 51% total return since that time.

However, don’t worry that if you don’t yet own ABR you have missed the party. The recent 2018 second quarter earnings report shows that the Arbor growth story will continue. You may not earn 50% per year, but total annual returns in the 20% range are likely. Here are the catalysts for continued above average returns.

The current yield is 8.5%. This is above the peer group, which means for the yield to be in line with those peers, the share price must move higher.
The ABR market cap just surpassed $1 billion. That is a level which will draw more institutional investor interests.
The company grew its balance sheet by 18% in the first half of 2018, well ahead of expectations. This is a company that is generating strong growth across all its business lines.
A recent litigation win means the company will likely pay a bonus dividend near the end of 2018.
Stock stories like Arbor Realty are not found in the mainstream financial news outlets. You also can’t find them using a stock screener. To find these types of opportunities for my subscribers I follow hundreds of stocks that the mainstream ignores.

Business Development Companies (BDCs) are the Jekyll and Hyde of the high yield stock universe. My analysis shows most of these stocks as not safe places to hunt for dividends. However, there are a handful that are attractive, high yield income stocks. The Small Business Credit Availability Act passed earlier this year loosened the leverage restrictions for BDCs. These new rules are likely to make the ugly even more unpleasant to own and the attractive BDCs even better income producing investments.

Business Development Companies operate under special rules that allow them to not pay corporate income taxes. They are required to provide investment capital—loans and equity investments—to small and midsized corporations. To retain its pass through tax status, a BDC must pay out at least 90% of net interest income as dividends to shareholders.

The problem with the BDC business model is that these companies make risky loans to businesses that cannot get financial through regular banking channels. At the same time, the companies must pay the majority of profits out as dividends. This means a BDC cannot set up reserves against bad loans. With the risk level of BDC loan customers, loan losses are unavoidable. Poorly managed BDCs experience a steady NAV erosion and are forced to slash dividends. Well managed BDCs have strategies to offset the NAV erosion using portfolio growth and equity investments in client companies.

A further restriction on the BDC business model limited debt to one times equity. That means a BDC with $500 million of equity could borrow another $500 million to own a $1 billion investment portfolio. Using leverage boost the net income per share of equity investors, i.e. shareholders. The Small Business Credit Availability Act allows a BDC to increase debt up to two times equity, effectively doubling the leverage available to these companies. A Board of Directors approval or vote by the majority of shareholders is required for a BDC to increase its debt limit. A one-year cooling off period is required for companies receiving board approval, but BDCs that seek approval via a shareholder vote will be able to make changes one day after a majority vote.

As with most things BDC associated, the new leverage rules will likely result in bad BDCs losing investor money even faster and the good management teams will be able to invest the added debt to produce dividend growth. Here are three of the better managed companies in the sector.

Goldman Sachs BDC, Inc. (NYSE: GSBD) is a newer BDC managed by the famed investment bank. The company launched with a March 2015 IPO. The dividend has been level at $0.45 per share since the IPO.

NAV per share has eroded over the last three years from $19.46 down to $18.10. For its annual meeting in June, the GSBD Board filed a proxy for shareholders to vote on a reduced management fee structure and to increase the company’s allowed amount of leverage. These should allow future growth of the portfolio and dividend.

The shares currently yield 8.4%.

TPG Specialty Lending (NYSE: TSLX) has been a publicly traded since March 2014. The BDC is managed by private asset manager TGP, which has $80 billion under management. The management team has demonstrated excellent discipline in its approach to making portfolio loans. As a result, the company has shown slow but steady NAV appreciation.

TSLX has not yet announced if or when it will take advantage of the new leverage limits. This BDC is unique in that it pays a base quarterly dividend of $0.39 per share and then each quarter if earnings justify it, an add-on dividend is also declared. A special dividend has been paid for each of the last five quarters, totaling $0.28 per share.

On the base dividend rate TSLX yields 8.1%.

Hercules Capital (Nasdaq: HTGC) is an internally managed BDC exclusively focused on making loans and equity investments in the venture capital space.

The company’s loans enabled some of America’s most promising, emerging growth, pre-IPO and M&A companies. It’s equity investments in these emerging growth companies have given Hercules an extra source of profits. For example, eight portfolio companies have completed or announced an IPO or M&A liquidity event so far in 2018.

HTGC has been a publicly traded BDC since 2005. The dividend has been steady to growing since 2018. The shares currently yield 9.1%.