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4 Top Dividend Kings to Buy and Hold Forever

By Matthew Frankel, CFP® - Jun 23, 2019 at 7:07AM

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These four stocks could produce strong growth and income in your portfolio for decades to come.

Real estate investment trusts, or REITs, can make great long-term investments. Not only do they typically pay above-average dividend yields, but they also have long-term growth potential as the value of their real estate holdings increases over time.

However, not all REITs are in the same boat. There are some top-notch REITs that have decades-long track records of market-beating returns and dividend increases. If I had to choose four REITs to put in a portfolio that I wasn't going to check for the next 10 years or more, here's what I'd buy.

Man holding 100 dollar bills in hand and puckering up to kiss them.

Image source: Getty Images.

Four rock-solid REITs to look at

Company (Symbol)

Market Capitalization

Dividend Yield

Realty Income (O 1.76%)

$23.1 billion


Public Storage (PSA 1.95%)

$42.3 billion


Welltower (WELL 2.02%)

$34.3 billion


Prologis (PLD 3.68%)

$52.1 billion


Data source: CNBC. Market cap and dividend yield data current as of 6/20/19.

A half-century of steady dividends

I've referred to Realty Income as the best overall dividend stock in the market, and for good reason. The company primarily invests in single-tenant retail properties, with tenants who operate in recession- and e-commerce-resistant areas of retail. And Realty Income's tenants generally sign long-term leases with terms of 15 years or more, locking in year after year of predictable, growing income.

This has resulted in some impressive performance. Realty Income has paid 587 consecutive monthly dividends and has increased its payout 102 times since its 1994 NYSE listing. What's more, the stock has generated a 16.9% annualized total return throughout its 25-year publicly traded history, handily beating the S&P 500.

A dominant market leader with room to grow

To call Public Storage the market leader in the self-storage business would be a major understatement. The company is larger than the next three publicly traded competitors combined.

Public Storage has built its empire up to 2,444 self-storage properties and has done it without taking on a ton of debt. For this reason, the company enjoys a great margin of safety when it comes to operating costs. In fact, Public Storage has said that it can break even with just 30% of its rentable space occupied -- and it's currently well above 90%.

Despite the company's massive size, there are two big reasons to believe that Public Storage still has room to grow. First, the self-storage industry is still highly fragmented, with about 80% of self-storage facilities operated by small companies and independent operators, leaving lots of possibilities to grow through acquisition. And Public Storage has recently started to ramp up its development efforts, where its scale and financial flexibility give it tremendous advantages.

Recession-resistance and a growing market

Welltower is the largest REIT that specializes in healthcare properties. Most of the portfolio is senior-focused, with a large concentration of senior housing, skilled nursing, and other properties that cater to the needs of older age groups.

There are two good reasons why Welltower could be a great addition to your dividend portfolio. First, healthcare is one of the most recession-proof types of real estate. After all, in tough times, people can stop shopping at the mall, stop going on vacation, etc., but they need healthcare. In Welltower's case, seniors not capable of living on their own need somewhere to go.

Second, the market for senior housing is expected to grow tremendously in the coming decades as the baby-boomer generation ages. In fact, the 85-and-older age group -- the bread-and-butter of senior housing -- is expected to roughly double over the next 20 years.

As e-commerce grows, so will the need for logistics real estate

It shouldn't come as a big surprise that e-commerce has grown by leaps and bounds over the past 20 years or so. From a real estate perspective, online shopping requires a lot of space. In fact, leading logistics REIT Prologis estimates that online retail requires roughly three times the logistical square footage as a traditional brick-and-mortar retailer.

Despite the growth, there's still lots of room to grow. In fact, e-commerce still only makes up roughly 10% of all retail sales in the U.S., according to the Census Bureau (up from about 4% in 2010). Along with this growth will come the need for more logistical properties, and with its massive scale and financial flexibility, Prologis is well-positioned to grow with the demand.

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Stocks Mentioned

Realty Income Corporation Stock Quote
Realty Income Corporation
$69.19 (1.76%) $1.20
Public Storage Stock Quote
Public Storage
$314.19 (1.95%) $6.02
Welltower Inc. Stock Quote
Welltower Inc.
$83.36 (2.02%) $1.65
Prologis, Inc. Stock Quote
Prologis, Inc.
$122.59 (3.68%) $4.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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