We recently compiled a list of the 10 Dividend Stocks For Steady Income. In this article, we are going to take a look at where CubeSmart (NYSE:CUBE) stands against the other dividend stocks.

Generating income has consistently been a primary goal for investors. To achieve this, they often opt for investments that provide steady and reliable returns over time. Dividend stocks are particularly popular in this regard, as they are well-regarded for offering regular income. Although using cash payouts from a stock portfolio is a popular approach among individuals nearing retirement, building an equity income portfolio is an option available to anyone. Over the years, dividends have significantly enhanced investors’ overall returns, making these stocks a compelling choice for income-focused portfolios. In certain periods, especially when equity returns fell below 10%, dividends have accounted for more than half of the total returns of major market indices, according to LSEG data.

Investors are increasingly emphasizing the quality of a company’s earnings. Examining factors such as dividends per share, dividend growth, and the stability of dividend payments can provide valuable insights into a company’s financial stability. Those who prioritize businesses with lower debt levels and higher profitability often target well-established, financially robust firms with greater flexibility. These high-quality companies typically demonstrate stronger resilience during market downturns and are more likely to sustain earnings growth across different market conditions.

Also read: 8 Best Dividend Leaders to Buy According to Wall Street Analysts

According to a report by BlackRock, historically, stocks that consistently grew or maintained their dividends have delivered better performance compared to those that either did not pay dividends or reduced their payouts. During market downturns, dividend-paying stocks often provide a buffer against the volatility of share prices. Companies that issue dividends typically strive to maintain these payments and are generally reluctant to reduce them unless absolutely unavoidable.

When investing in dividend stocks, investors often evaluate the dividend yield. Experts recommend focusing on yields within the 3% to 6% range, as higher yields may indicate potential yield traps. Brian Bollinger, president of Simply Safe Dividends, has also emphasized this point. Here are some comments from the analyst:

“I generally like to advocate for an approach of targeting great businesses that might pay closer to a 3% to 4% dividend yield.”

He further mentioned that these companies tend to gradually increase their payouts, which can enhance annual income streams and help counter the impact of inflation. Regarding companies with lower yields, he noted that they are often associated with more secure businesses and more reliable dividend payments. For example, the Dividend Aristocrat Index, which monitors companies with at least 25 years of consistent dividend growth, has an indicated yield of 2.28%. According to Bollinger, many of the firms in this index are well-established and financially stable. He suggested that creating a diversified portfolio of these companies can provide reassurance, as it builds a solid foundation for a growing stream of passive income, regardless of market fluctuations. He further said:

“When stock prices fall, it’s so easy to panic, but dividend investing can overcome that because you’re just trying to stay focused on your income stream. You don’t care so much about the markets’ short-term ups and downs anymore.”

As a result, investors often include dividend stocks in their portfolios.

Our Methodology:

For this list, we first filtered dividend stocks that have shown at least 10 consecutive years of dividend growth. From this group, we selected those with dividend yields above 1.5% as of December 20. Lastly, we chose 10 companies that have achieved a share price return of over 30% over the past five years. The stocks are ranked in ascending order of their dividend yields as of December 20. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

CubeSmart (NYSE:CUBE)

Dividend Yield as of December 20: 4.83%

5-Year Share Price Return: 35.88%

CubeSmart (NYSE:CUBE) is an American real estate investment trust company that mainly invests in self-storage facilities in the US. In the third quarter of 2024, the company reported revenues of nearly $271 million in Q3 2024, reflecting a 1.1% increase compared to the same period last year and surpassing analysts’ expectations by $1.40 million. During the quarter, the company added 24 stores to its third-party management platform, raising the total number of managed locations to 893. CubeSmart also has agreements with developers to build self-storage facilities in areas with high entry barriers. As of September 30, 2024, the company was constructing two joint venture development properties, with a total projected investment of $36.9 million, of which $9.1 million had already been spent. Both properties, located in New York, are slated to open in Q3 2025.

In Q3, CubeSmart (NYSE:CUBE) continued to adapt to a competitive market for new customer rental rates, while maintaining strong retention among existing customers. It is under contract to acquire two properties—one in Oregon and another in Pennsylvania—for a combined purchase price of approximately $22.0 million. These acquisitions are anticipated to be finalized in Q4 2024. With a 5-year return of nearly 36%, CUBE is one of the best stocks with steady dividends.

Diamond Hill Capital also highlighted this in its Q3 2024 investor letter. Here is what the firm has to say:

“On an individual holdings basis, top contributors to return in Q3 included Regal Rexnord, NVR and CubeSmart (NYSE:CUBE). Similarly, shares of self-storage real estate investment trust (REIT) CubeSmart benefited from the broad tailwind of lower interest rates. The company continues delivering solid operating results, even in a slower real estate environment.”

On December 16, CubeSmart (NYSE:CUBE) declared a 2% hike in its quarterly dividend to $0.52 per share. Through this increase, the company stretched its dividend growth streak to 16 years. The stock supports a dividend yield of 4.83%, as of December 20.

Insider Monkey’s database of Q3 2024 showed that 26 hedge funds, up from 23 in the previous quarter, held stakes in CubeSmart (NYSE:CUBE). These stakes have a consolidated value of over $217.6 million.

Overall CUBE ranks 2nd on our list of the best stocks with steady dividends. While we acknowledge the potential of CUBE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CUBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. 

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.