Building Long-Term Wealth: The Case for US Dividend Growth Stocks and REITs

Why Dividend Stocks Matter in the US Market

Over the past five decades, dividend-paying stocks in the S&P 500 have demonstrated remarkable resilience, nearly doubling the returns of their non-dividend-paying counterparts. According to research from Ned Davis Research and Hartford Funds, this outperformance becomes even more pronounced when focusing on companies that consistently raise their payouts year after year.

The real estate investment trust (REIT) sector stands out as a particularly attractive hunting ground for long-term investors seeking growing passive income. Unlike traditional equities, REITs are structured to distribute substantial portions of their earnings to shareholders, creating a natural wealth-building machine for patient capital.

Three REIT Leaders Reshaping the US Landscape

Realty Income: The Dividend Aristocrat

Realty Income (NYSE: O) has earned its status as the world’s sixth-largest REIT through an extraordinary track record of dividend consistency. The company operates over 15,000 properties across the US and Europe, specializing in long-term net leases that shift most operational burdens to tenants. This structure creates remarkably stable cash flows.

What truly sets Realty Income apart is its 112 consecutive quarters of dividend increases—a two-decade demonstration of commitment to shareholders. The company has grown its dividend at a 4.2% compound annual rate over the past 30 years. With a current yield exceeding 5.7%, investors have witnessed a 13.7% compound annual total return. The REIT operates within a massive addressable market (estimated at $14 trillion for global net lease properties), providing ample room for continued expansion and dividend growth.

Extra Space Storage: The Self-Storage Powerhouse

Extra Space Storage (NYSE: EXR) dominates the US self-storage market by a significant margin, controlling approximately 15.3% of the country’s entire sector through 4,200 properties spanning over 322 million square feet. The company’s diversified operational model—combining owned properties, joint venture interests, and third-party management—creates multiple income streams and expansion opportunities.

Over the past decade, the company has more than doubled its dividend, reflecting a 110% payout increase that mirrors its aggressive growth strategy. Recent moves, including the $15 billion acquisition of fellow REIT Life Storage in 2023, underscore management’s confidence in the sector’s long-term prospects. With a current dividend yield exceeding 6% and a strong balance sheet, Extra Space Storage has delivered over 2,400% in total returns across 20 years—ranking as the third-best performer in the entire REIT sector. The company’s bridge lending platform and strategic asset acquisitions position it well for sustained dividend growth.

Rexford Industrial Realty: The Specialized Growth Play

Rexford Industrial Realty (NYSE: REXR) takes a focused approach, concentrating exclusively on Southern California’s industrial real estate market—one of the world’s largest and most dynamic. The REIT’s 420-property portfolio spans 51 million square feet in a region characterized by chronic supply tightness and robust demand fundamentals.

These favorable conditions translate into concrete results. New leases signed recently averaged 23.9% above prior rates, while featuring embedded annual rent escalations of 3.6%. This pricing power has enabled Rexford to achieve an impressive 15% compound annual dividend growth rate over the past five years. With a 4.2% yield and a strong balance sheet supporting continued capital deployment, the REIT appears well-positioned to sustain its dividend-raising trajectory.

The Dividend Growth Narrative in the US Market

The three REITs above share a common thread: they’ve mastered the art of combining real estate fundamentals with shareholder-friendly capital allocation. Their success reflects deeper US market trends—stable interest rate environments now support income-focused investing, demographic shifts favor industrial and self-storage real estate, and net lease structures provide predictable cash flows.

For investors seeking long-term wealth accumulation through dividend reinvestment, these REIT leaders offer a compelling proposition: substantial current income combined with the prospect of growing payouts over decades.

The Path Forward

REITs remain among the most reliable vehicles for building generational wealth through dividend income. Extra Space Storage, Realty Income, and Rexford Industrial Realty have each demonstrated their ability to grow shareholder distributions even during challenging periods. As economic conditions stabilize and these companies continue expanding their US portfolios, the case for holding these dividend stocks indefinitely grows stronger.