These 2 dividend-growth stocks could help you secure financial independence

london property
london property

Dividends can make or break a portfolio's performance. Studies have shown that around 50% of investors' returns come from dividends alone, so if you want to match the market, dividends are essential.

Real estate investment trusts are the perfect dividend stocks. Their dividends are paid out from property income, which is stable and recurring. What's more, investors can benefit from a rise in the value of the underlying property.

Building up the portfolio

LXI Reit(LSE: LXI) is a relatively new trust, and as a result, flies under the radar of most investors. The firm only went public at the end of February and since its IPO, management has been building up the portfolio with funds received from the listing as well as a £55m loan facility.

Today it announced that it has finished its investment programme, having spent the majority of its funds on a high-quality commercial property portfolio. Across the company's assets, the average net initial yield is 5.94%, and the weighted average unexpired lease term to first break is 24 years, giving a steady income stream for the next two-and-a-half decades. The income is secured against 17 strong tenants, including the likes of Aldi, Costa Coffee and General Electric while 96% of the leases have index-linked rent uplifts.

LXI was founded with the goal of producing a steady, secure, inflation-linked income to investors, and it looks as if its property portfolio will help the company meet this goal. Management is targeting a minimum annual dividend of 5p per ordinary share, starting from the financial period commencing 1 April 2018.

Based on today's stock price, the expected 5p per share payout works out as a yield of around 4.9%. As well as the 5p per share dividend target, LXI is planning to produce an 8% per annum return for investors over the medium term. This goal will be achieved with the 4.9% dividend yield and yearly valuation uplifts of the property portfolio.

Unfortunately, as the company has only just completed its property acquisitions, there's no detail as of yet on the net asset value per share -- the metric that's generally used to value REITs -- although the targeted 8% per annum return makes the LXI look highly attractive for buy-and-hold investors.

Defensive income

Secure Income REIT(LSE: SIR) is one of my favourite REITs because the company has a record of producing returns for investors and has a defensive property portfolio. Indeed, the company's property portfolio contains 20 freehold private hospitals, giving it an extremely stable income stream from defensive assets. Overall, the group owns a portfolio of 81 real estate assets with a weighted average unexpired lease term of over 23 years and a net initial yield of 5.3%.

Since 2007, according to the company's figures, the return on its assets (both income and capital growth) has averaged between 9.5% and 8.5% per annum since inception. And since the REIT's IPO in June 2014, it has produced a total return for investors of 61%, a compound annual return of 17.2%.

City analysts expect Secure to pay a dividend of 13.9p per share to investors this year, giving a dividend yield of around 4%. The last reported net asset value per share was 324p, so at the time of writing, shares in Secure trade at a premium of approximately 8% to the underlying asset value.

You can't live without dividends

You can't live without dividends, that's why Lxi and Secure Income could be great additions to any portfolio. The steady income from these companies will improve your returns and substantially increase the chances of you being able to achieve financial independence.

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Rupert Hargreaves owns no stock mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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