If you're looking for stocks that could generate worry-free growth and income in your portfolio for years, there are some great options in the real estate sector. Some of the top-notch real estate investment trusts, or REITs, pay above-average dividends, have incredible long-term growth potential, and surprisingly low-risk business models. Here are three in particular that could become part of your portfolio for decades to come.


Stock Symbol

Recent Stock Price

Dividend Yield

Equity Residential




Boston Properties




Realty Income




Data source: TD Ameritrade. Prices and dividend yields as of 8/14/17.

Desirable apartment buildings in high-demand markets

Equity Residential (NYSE:EQR) is an apartment REIT that focuses on six high-barrier markets, such as San Francisco, New York, and Washington, D.C. The company owns more than 300 apartment properties with 77,498 apartment units. Equity focuses on areas with a high concentration of rental households, limited supply of apartments, and walkable amenities.

Two high-rise apartment buildings.

Image source: Getty Images. (Note: Image does not necessarily depict one of Equity Residential's properties.)

This combination results in strong occupancy and rental growth. In fact, recent leases show year-over-year rent growth of 4.5%-5%, and the company's current occupancy rate is an impressive 95.8%.

Equity Residential actively manages its portfolio -- selling low-growth assets and redeploying its capital into assets with stronger growth potential. In 2016 alone, Equity sold $6.9 billion of assets that it considered to be "non-core," and the company has about $2 billion of new properties under development.

Historically, Equity's markets have appreciated faster than average, and the company has proven that it can create shareholder value in all stages of the economic cycle.

Superior office properties and a winning investment strategy

Boston Properties (NYSE:BXP) specializes in Class A office properties, and has a portfolio of 175 properties with 48.2 million square feet of space. Like Equity Residential, Boston Properties focuses on markets with limited supply and above-average growth, in order to achieve high occupancy rates and rent growth. The company's three largest markets, by net operating income, are New York, Boston (hence the name), and Washington, D.C.

The company grows through a combination of acquisitions and development, preferring the latter, as development tends to deliver stronger returns, create value, and keep the company's portfolio more modern than peers'. The company does a great job of recycling capital and keeping its money invested in the best opportunities. Since its 1997 IPO, Boston Properties has spent $13.8 billion on acquisitions and another $10.2 billion on property dispositions. And during that time, this business model has produced 3.7 times the total return of the S&P 500.

With $2.6 billion of active developments in the pipeline consisting of 4.5 million square feet of space, and another 2.9 million square feet planned for future development, it doesn't look like Boston Properties' winning business model is at risk anytime soon.

The right way to invest in brick-and-mortar retail

Many investors are afraid to invest in any company that is involved with brick-and-mortar retail, and this is certainly understandable. However, it's also important to understand that not all retail businesses are facing the same difficulties, and the generally negative sentiment in the sector has created some bargains.

Realty Income (NYSE:O) is an excellent example of this. The company is a net-lease retail REIT, which focuses on freestanding retail properties that operate in one or more of three types of businesses:

  • Non-discretionary retail -- Businesses that sell essential products tend to be recession-resistant.
  • Service-based retail -- Businesses like movie theaters, fitness centers, and restaurants provide in-person services, and are therefore immune to e-commerce headwinds.
  • Low-price retail -- Think of dollar stores and warehouse clubs. These businesses not only hold up well during tough economies, but also tend to offer bargains that e-commerce retailers can't match.

In addition, Realty Income's net-lease structure minimizes turnover with 10+ year initial lease terms, and tenants are required to cover the variable expenses of property taxes, insurance, and building maintenance. All Realty Income has to do is find a tenant and collect a steady, growing, stream of income for a decade or more.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.