How to invest your maximum Social Security benefit of $4,194 in dividend stocks

If you retire at age 70 this year, you can get the maximum Social Security benefit of $4,194 a month and keep your new cash flow working for you, even if you’ve stopped working yourself.

This is true, of course, regardless of when you retire or how much you’re collecting each month. Investing in stocks that generate passive income can give you portfolio growth and spending money from dividend payments. A great place to look is in real estate investment trusts (REITs).

REITs are income-producing property groups that are required by tax law to pay at least 90% of their taxable income to shareholders. There are more than 200 publicly traded REITs covering a wide range of industries, providing the opportunity to diversify and select particularly promising industry sectors.

Alexandria Real Estate Stocks (THEY ARE -2.44%) AND Gladstone Commercial (GOOD -2.28%) there are two that I own and plan to stick with as I move into my retirement years, which have just begun.

Alexandria is a leading owner-operator of life sciences properties, while Gladstone Commercial invests in office and industrial space. The former behaves a bit more like a growth stock and the latter a bit more like an income stock, as you can see in this chart, which shows their respective price movement and yield over the past 10 years.

ARE data from YCharts

Prospects for Gladstone and Alexandria

There are of course no guarantees here, but both of these companies have long records of solid performance and good prospects. Gladstone Commercial is one of four Gladstone companies, all of which pay monthly dividends. The other three are Gladstone Land, Gladstone InvestmentAND Capital Gladstone.

As for Gladstone Commercial, this revenue comes from a current portfolio of 136 properties in 27 states with a client list of 112 tenants in 19 industries. The current mix is ​​52% industrial and 44% office, but the company plans to focus on industrial in the future.

CEO David Gladstone said in a Motley Fool Live interview on August 23 that all 15 of the REIT’s current acquisition prospects are industrial properties and that he has serious doubts about the office sector as the nature of the workplace evolves.

He also said his company deliberately manages its holdings to ensure a stable and predictable income stream. Gladstone Commercial does it particularly well, having offered 122 straight monthly payments and a yield of about 7.5% — among the highest of equity REITs — that hasn’t changed much over the past decade.

Alexandria shares, meanwhile, are yielding about 3% and building a record of 13 consecutive years of at least one dividend increase. The owner of about 75 million square feet of high-end lab and office space clustered in co-working spaces in markets like Boston, San Francisco, New York City and North Carolina’s Research Triangle is exiting one of its strongest neighborhoods to now, for rent. increases and the demand for space in its growing portfolio promises stronger performance in the future.

A look at total return and dividend power

Back to that point about Alexandria being a bit more of a growth stock and Gladstone Commercial being a bit more of an income play. It turns out that, in terms of total return, the difference isn’t that big in the long run between the two.

Check out this chart. It shows that Gladstone Commercial’s share price has only risen about 16% in the last 10 years, but due to dividend payments, the total return is nearly 160%. Alexandria stock, meanwhile, is up about 118% over that time and the total return is about 196%.

ARE data from YCharts

The chart also shows the power of compounding through reinvestment if you don’t take the money and run it every month. But don’t expect to double your money or anything close to that without significant skin in that specific game. To earn $4,200 a month in dividends, you would need, for example, to collect a yield of about 5% on about $1 million invested.

This is not realistic or advisable if you are thinking of putting a large majority of your investable assets into just two stocks – these or any other.

But splitting your $4,194 — or any other amount — between Alexandria and Gladstone Commercial would still give you an actual yield of roughly that 5%. Alexandria pays quarterly and Gladstone monthly, but either way and collectively, that’s not too shabby, especially for those looking to shine through their golden years, now or later.