You Can Generate Passive Income From Real Estate With As Little As $125
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Real estate offers a powerful opportunity for building wealth.
Owning a rental property, for instance, can provide a steady stream of passive income while also allowing your wealth to grow as the property's value appreciates over time.
There are various ways to invest in real estate and one of the simplest and most affordable methods is purchasing shares in a real estate investment trust (REIT). REITs manage extensive portfolios of income-generating properties, making them accessible to investors.
Learn about two REITs available for around $125 per share.
Camden Property Trust (NYSE:CPT) is a residential REIT specializing in multifamily apartment communities in the southern United States. According to The Motley Fool, the company owns and operates 172 properties, comprising 58,250 apartments in 15 metropolitan markets.
These properties generate steadily increasing rental income, which is distributed to shareholders as dividends. Camden's stock is currently priced at approximately $125 per share and offers a quarterly dividend of $1.03 per share ($4.12 annually), translating to a 3.3% dividend yield at the current stock price.
Dividend income is just one aspect of the potential return. Camden focuses on apartments in major metro areas with above-average population and job growth. This trend drives strong demand for rental housing, keeping occupancy rates high and increasing rents above average.
Camden also capitalizes on growth opportunities by developing new apartment communities and acquiring properties, further boosting its rental income. These factors position the REIT to consistently grow its dividend over time.
The growth also contributes to increasing the value of Camden's shares. Since its public debut over 30 years ago, Camden's stock price has grown at an average annual rate of more than 5.5%. Combined with its dividend income, the REIT has delivered an average annual return of 11.3%.
Looking ahead, the company has significant growth potential. Camden is developing five more communities and with rising rents and other strategic investments, it is well-positioned to continue increasing its dividend income and share price.
Sun Communities (NYSE:SUI) is another residential REIT that specializes in unique property types such as manufactured home communities, RV communities and marinas. The company owns 659 properties across the U.S., Canada and the U.K., featuring 179,130 developed sites and 48,760 wet slips or dry storage spaces.
Sun Communities shares are currently priced at approximately $125 each. The REIT pays a quarterly dividend of $0.94 per share ($3.75 annually), offering a dividend yield of around 3%.
Manufactured home communities have proved to be excellent long-term investments for wealth growth. They enjoy steady demand, as relocating a manufactured home from a community is costly, enabling owners to raise rents consistently—even during economic downturns.
Sun Communities has achieved 20 consecutive years of positive net operating income (NOI) growth thanks to this stability. Since 2020, its NOI has grown at a compound annual rate of 5.2%, outpacing the REIT sector average of 3.2%.
Sun Communities has also enhanced shareholder value through strategic investments, including expanding its manufactured home community portfolio and diversifying into niche property types such as RV communities, U.K. holiday parks and marinas.
Over its history as a public company, the REIT's share price has grown at an average annual rate of more than 6%. Combined with its steadily increasing dividend income, the total annual return to shareholders is 12.8%.
Looking ahead, Sun Communities is well-positioned to continue growing its income and enhancing shareholder value. Demand for manufactured housing remains strong, particularly as other options become more expensive.
At the same time, the growing popularity of outdoor experiences supports its RV communities and marinas. With a strong balance sheet, the REIT has the financial flexibility to seize expansion opportunities and further grow its portfolio.
Real estate is a powerful investment for generating income and long-term wealth. It offers the opportunity to earn passive income while benefiting from steady price appreciation as property values rise alongside rental income.
Camden Property Trust and Sun Communities exemplify this potential, having delivered consistent returns over the years. With strong prospects for continued income and growth, these REITs could be excellent options for anyone looking to start earning passive income and building wealth through real estate in the year ahead.
