Dividend Stocks to Buy Now:American Capital Realty Properties (ARCP)
ARCP Dividend Yield: 7.5%
Next on the beaten-and-battered dividend stocks list is triple-net retail REIT American Capital Realty Properties (ARCP), which is down nearly 30% from its May highs. ARCP is unique among dividend stock in that it pays its dividend monthly rather than quarterly (see 5 Monthly Dividend Stocks to Snag in 2014).
In the low-yield environment of the past view years, triple-net REITs such as ARCP have come to be viewed as bond substitutes. But even in a more normal yield environment, I consider triple-net REITs to be preferable to bonds. Unlike bonds, triple-net REITs generally have a degree of built-in inflation protection as the rents that support the dividend rise over time.
And in the case of ARCP, you’re getting a high 7.5% yield from a conservative property portfolio that would normally only be possible with a highly-risky junk bond.
ARCP has a shorter trading history than some of its peers, such as Realty Income (O) and National Retail Properties (NNN), which largely explains why its yield is higher. As a relatively new REIT, ARCP stock is largely unfollowed by investors. But once its merger with Cole Properties (COLE) is completed, ARCP will be the largest trip-net REIT by market cap and total square footage, and it will no longer be flying under Wall Street’s radar.
As was the case with KMI, ARCP insiders have been using the recent weakness as a buying opportunity. In the month of November, four company officers bought a combined 72,500 shares of ARCP stock worth over $950,000, and this followed a steady stream of insider buying throughout the summer.