Why I Just Bought More of These 2 High-Yield Dividend Stocks in My Retirement Account and Expect to Continue Adding to Their Stocks in 2025

I pack my retirement account with dividend paying stocks. The thesis is simple: Dividend stocks have historically outperformed non-payers by a wide margin. The biggest outperformance has come from companies that routinely increase their dividends. According to data from Ned Davis Research and Hartford Funds, dividend producers have delivered an average annual total return of 10.2% over the past 50 years, compared to 4.3% for the average non-dividend payer.

My strategy is to focus on stocks that make paying dividends a priority. Consistent growth and a higher yield is strong proof of that. Camden Property Trust (CPT -1.00%) and EastGroup Properties (EGP -0.89%) certainly fit the bill. Therefore, I have recently bought more shares, a trend I expect to continue next year.

The strength to keep growing

Camden Property Trust is a property investment trust (REIT) focused on owning residential rental properties. The company currently owns 172 properties with around 58,250 rental units. It focuses on owning apartments and single-family homes in high-growth markets that enjoy above-average employment and population growth. It owns properties in 15 major markets, predominantly across the southern half of the United States.

The Residential REIT’s dividend yield is currently 3.6%. It is approximately three times higher than S&P 500‘s dividend yield (approx. 1.2%).

Camden has a solid track record of growing its dividend. While the REIT had to reduce its payout during the Great Recession, growth quickly resumed, and its payout is now well above the level it was before that reset.

The REIT is in an excellent position to continue to increase its dividend payout in the future. It has a relatively low dividend payout ratio (about 70% of its adjusted funds from operations (FFO) this year). It has that too a very strong one balance. This gives it the financial flexibility to continue expanding its portfolio.

Camden currently has six communities under development or in the lease-up phase, which should stabilize over the next few years. It has already funded about 65% of the estimated $747 million cost of these multifamily and build-to-rent single-family communities. Due to its strong liquidity, it can easily finance the remaining costs (it has almost $1.1 billion in cash or availability under its credit facility).

The strong liquidity will enable the REIT to continue to grow. The currently has three more projects under development, representing $673 million of future investment potential. It can also make acquisitions (land suitable for future developments and operating communities) when opportunities arise. With a strong financial profile and visible growth prospects, Camden should have no problem continuing to grow its dividend in the future.

Very steady growth

EastGroup Properties is one industrial REIT focused on owning warehouses. The currently owns approximately 60.5 million square feet of space, predominantly across the fast-growing US Sunbelt region.

The company has built about half of its portfolio from scratch. It has invested about $3 billion since 1996 to build 263 properties with 30.1 million square feet of space. REIT builds in business park settings because this strategy offers higher returns with less risk. EastGroup Properties will also acquire stock, including stabilized operating properties and those with added value upwards in relation to expansion, conversion or leasing options.

EastGroup’s strategy has paid off for investors over the years. It recently declared its 180th consecutive quarterly dividend. It has either maintained or increased its dividend over the past 32 years, raising it in 29 of them years, including the last 13 in a row. Its payout currently yields 3.5%.

The industrial REIT is in a solid position to continue raising its dividend payout. It currently has 17 development and added value projects underway on a total expected cost of $528 million. These investments will increase its cash flow as it closes them in the coming quarters. Meanwhile, EastGroup has a solid financial profile, gives it the flexibility to continue to expand its portfolio as opportunities arise. For example, it spent $144 million buying operating properties across three existing markets this year.

High quality, high yielding dividend growth stocks

Camden Property Trust and EastGroup Properties prioritize dividend payments. This is evident in their payouts with higher returns and solid growth results. With more dividend growth likely ahead, they should be able to deliver solid total returns in the coming years, which should help increase the value of my retirement nest egg. Therefore, I recently bought more shares and plan to continue do it in 2025.