Not really a complete comparison.
With rental properties, you have depreciation for tax purposes, and likely owe no taxes (or very little) annually. You might even get a refund (if you had other taxable income), reducing your net taxes due. You’ll also increase your returns by leveraging OPM (other peoples’ money), as you’ll almost certainly invest maybe 20%, and borrow the balance from a bank. When you sell, you can roll gains over into a new property and defer capital gains taxes. You will have concentration risks (property specific and location specific (think house fire, or hurricane/tornado). None of that is true with dividend investing (unless you want to borrow in a margin account to buy more stock, or buy single, speculative dividend stocks).
With dividend investing, you can easily diversify via ETF’s or mutual funds, but portfolio yield will suffer vs. hand-selecting higher-yielding stocks. Not so with rental properties, unless you want to be a REIT investor. You can also pursue stocks that pay “qualified dividends”, in part or total, to minimize annual tax obligations. But regardless of this, you’re going to have taxes due each year on this passive income.
(Disclosure - I don’t do rental properties due to: concentration risk, lower liquidity, more time consuming.)
“With dividend investing, you can easily diversify via ETF’s or mutual funds, but portfolio yield will suffer vs. hand-selecting higher-yielding stocks.”
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I have ETF’s and individual stocks but the thing I like about the latter is being able to select those with consistently strong dividend growth rates. Never any guarantees but I do what I can to get the odds in my favor. :)