The top real estate stocks are defying market headwinds with remarkable resilience. Despite mortgage rates soaring to record highs over the past couple of decades, the U.S. real estate market continues to show extraordinary strength. Property prices remain on an upward trajectory, and the persistent growth is mainly fueled by a significant supply-demand imbalance. The market’s resilience is underscored by superb demand and stringent lending standards, which lower the overall risk.

That said, in this environment, wagering on the best high-yielding real estate stocks is an effective strategy. High-yielding real estate stocks, offer stable dividend income and can be scooped up without breaking the bank. Moreover, adding these stocks can lead to portfolio diversification and provide massive upside potential for significant capital appreciation. These three real estate stocks stand-out, offering an excellent combination of upside potential and regular dividend income.

Cousins Properties (CUZ)

Cousins Properties (NYSE:CUZ) is a top REIT specializing in Class A office spaces in the Sun Belt. This Focus on the Sun Belt region has positioned the firm as a top player in its niche. The area has seen economic and demographic growth drive up demand for office space.

Moreover, its high-quality properties attract high-income clients, ensuring stable rental income and low vacancy rates. Additionally, the post-pandemic shift towards modern, flexible workspaces adds to the REIT’s bull case. Additionally, it has made some savvy acquisitions lately, which has helped it grow its top-and-bottom lines at an encouraging pace.

Despite the headwinds, recent results mostly align with its historical single-digit growth across both lines. And, CUZ stock has been growing at an excellent pace, with a 48% jump in value over the past nine months. More importantly, it yields over 4.7%, raising its payout for the past five consecutive years.

Realty Income (O)

Realty Income (NYSE:O) is a stand-out REIT, popularly known as the “Monthly Dividend Company.” O focuses on retail, industrial and data centers across the U.S. and Europe. The firm demonstrates robust portfolio health with an impressive 98.6% occupancy rate and a rent recapture rate of over 100%. This consistent performance boosts investor confidence significantly while cementing its reputation as a powerful source of monthly income.

Furthermore, the REIT is equally compelling, boasting a net operating cash flow of $3.25 billion and a levered free cash flow of $2.36 billion over the past 12 months. These figures highlight the firm’s operational efficiency and ability to generate substantial cash from its diversified asset base. Its dividend yield amounts to a superb 5.21%, with 26 consecutive years of dividend payout expansion. Realty will continue growing shareholder returns as we advance, with a forward AFFO growth of 2.8%, significantly higher than its 2% year-over-year (YOY) AFFO growth. With its financial flexibility, Realty Income effectively navigates reinvestment, debt management and dividend distribution, making it a reliable dividend play.

CTO Realty Growth (CTO)

CTO Realty Growth (NYSE:CTO) is another excellent REIT that sticks out of the crowd for its dynamic portfolio of retail properties across the vibrant Sun Belt. With a highly diversified asset portfolio, it operates across four dynamic segments, including management services, commercial loans and investments, real estate operations and income properties. Also, it owns mineral interests in Florida while boasting an impressive inventory of mitigation credits.

Recently, it announced deals covering 100,000 square feet of new leases at an attractive average rent of $27.12 per square foot. Moreover, it announced that Regal Cinemas would be replaced with a higher-paying tenant. And, it acquired a key property in an Orlando shopping center, bolstering its market share in Florida.

Furthermore, the firm significantly outperforms its sector in terms of dividend yields, with a four-year average yield of 12.91%, nearly triple the sector median. Its AFFO yield over the past year is 10.2%, roughly 56.3% above the median. Also, it’s important to note that it has grown its dividend payouts by more than 67% over the past five years.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.