Matt DiLallo, The Motley Fool
5 min read
In This Article:
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Prologis has grown its dividend at a 13% compound annual rate over the past five years.
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Realty Income has increased its monthly dividend payment 131 times since its public market listing in 1994.
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Mid-America Apartment Communities has grown its dividend at a 7% compound annual rate over the last decade.
Investing in dividend stocks is a wise long-term investment strategy. According to data from Hartford Funds and Ned Davis Research, the average dividend-paying stock has outperformed nonpayers by more than 2-to-1 over the past 50 years. The best returns have come from dividend growers (10.2% average annual total return).
Prologis (NYSE: PLD), Realty Income (NYSE: O), and Mid-America Apartment Communities (NYSE: MAA) have excellent records of paying a growing dividend. With more growth likely, they're brilliant dividend stocks to buy now and hold long-term.
Prologis has a strong record of growing its dividend. The leading industrial REIT has increased its payment every year for more than a decade. It has grown its payout at a 13% compound annual rate over the past five years. That's more than double the rate of the S&P 500 (SNPINDEX: ^GSPC) (5%) and other REITs (6%).
The REIT's growing dividend has helped drive 13.6% annualized total returns for its investors over the last decade. Prologis' dividend currently yields nearly 4%, putting it several times higher than the S&P 500 (less than 1.5%).
The industrial REIT should have no trouble increasing its dividend in the future. It generates stable and growing cash flow backed by long-term leases with built-in rental escalation clauses. Most of its current lease rates are well below market rents. Because of that, Prologis should be able to sign new leases at much higher rates as legacy leases expire. With demand for warehouse space expected to continue growing and supplies likely to remain constrained due to high construction costs and less available land for development, rental rates should continue to rise.
Prologis also has a fortress financial profile, which gives it significant flexibility to invest in growing its portfolio. It has a vast land bank to develop new warehouses and selectively build data centers. The REIT can also make acquisitions as accretive opportunities arise.
Realty Income's mission is to invest in places that enable it to deliver a dependable and growing monthly dividend to its investors. The diversified REIT (retail, industrial, gaming, and other properties) has certainly delivered on its mission over the years. It has increased its dividend 131 times since its public market listing in 1994, including the past 111 consecutive quarters and for 30 straight years. The landlord has grown its dividend at a 4.2% compound annual rate since going public, which has helped drive 13.6% compound annual total returns for its investors.
