There have been several bull and bear markets over the past 25 years, and the bulls may be making another run. While high-flying growth stocks tend to attract more attention, don't overlook strong dividend payers that can also be a valuable addition to your portfolio, providing steady income along with long-term growth.
Among their number are real estate investment trusts (REITs), owners of income-producing property who, by dint of their tax status, are required to distribute at least 90% of their taxable income each year to shareholders.
Three good choices to consider are American Tower(NYSE: AMT), Prologis(NYSE: PLD), and Realty Income(NYSE: O). While in very different businesses, each stand to be excellent long-term investments due to their consistent dividend payouts, strong balance sheets, and resilience to economic fluctuations.
The chart below shows the total return for all three REITs since American Tower went public in 1998 (Realty Income did so in 1994 and Prologis in 1991). Despite the relatively conservative nature of real estate investing, all three of these companies have handily outperformed the S&P 500 over the past quarter century.
O Total Return Level data by YCharts
Let's take a look at each.
1. American Tower
American Tower holds a dominant position in global digital infrastructure, growing its network of towers and more recently data centers and small cell antennas to about 225,000 sites in 25 different countries.
The major mobile carriers dominate this infrastructure REIT's tenant list, but thousands more customers also provide a steady cash flow with the sector's demand expected to be on the rise for years to come.
American Tower stock has jumped about 18% in the past month and now trades for about $201 per share, but analysts give it a consensus target price of $228.60, pointing to room to grow. The current yield is about $3.2%, and 12 straight years of dividend increases show the payout just might keep growing, too.
2. Prologis
Prologis is the 1.2 billion-square-foot gorilla of warehouse space, providing business-to-business and retail/online fulfillment space to about 6,700 customers in 19 countries.
This industrial REIT's vast client list is anchored by reliable rent-payers like FedEx and Amazon, and the demand for logistics infrastructure that exploded over the past decade should continue to keep its space and coffers full.
Prologis stock jumped about 14% in November and now trades at about $110 a share, good for a yield of about 3.2%. Analysts give it a consensus target price of $139, a very nice potential upside to go along with 10 straight years of dividend increases, including by an annualized 14% over the past three years.
3. Realty Income
Realty Income is the largest and perhaps best known of retail REITs and a poster child for dividend stocks, with a record of 640 monthly dividends and 31 consecutive years of annual increases.
Realty Income now owns about 13,000 rent-producing properties anchored by brand-name retailers. Industrial properties and casinos add to the mix, and Realty Income just announced plans for the $9.3 billion acquisition of Spirit Realty Capital and its more than 2,100 retail and industrial properties.
Realty Income stock has jumped about 11% in the past month but is still yielding a nice 5.7% at a share price of about $54 that analysts give a consensus target price of $60.90.
Ready to return to steady growth
These REITs are the biggest of their kind and are priced nicely for continued turnarounds from the year-over-year battering shown in the chart above.
With strong track records, economic moats, and exposure to secular demand trends, they have promising long-term prospects -- with steady dividends along the way. For investors taking a buy-and-hold approach, these three REITs warrant serious consideration.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Marc Rapport has positions in Amazon, American Tower, Prologis, and Realty Income. The Motley Fool has positions in and recommends Amazon, American Tower, FedEx, Prologis, and Realty Income. The Motley Fool recommends the following options: long January 2026 $180 calls on American Tower and short January 2026 $185 calls on American Tower. The Motley Fool has a disclosure policy.
