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3 Dividend Aristocrats to Buy and Hold Forever

By Marc Rapport – Dec 23, 2021 at 9:00AM

Key Points

  • Three of the 65 Dividend Aristocrats are real estate investment trusts.
  • Realty Income and Federal Realty are retail-based; Essex Property Trust owns multifamily properties.
  • Their devotion to decades of annual dividend hikes bodes well for buy-and-hold investors.

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These REITs have been growing dividends for decades and could continue for many more.

Dividend Aristocrats are a royal court of S&P 500 stocks that have raised their dividend payouts each year for at least 25 years. The list is reviewed and updated each year by S&P Dow Jones Indices, and investors seeking passive income from reliable companies with strong records of growth and returns can do worse than focusing on these dividend stocks as avenues for increasing wealth.

There are 65 companies on the Dividend Aristocrats list, and three of them are real estate stocks. In fact, all three are real estate investment trusts (REITs). They are Realty Income (O -1.34%), with 26 straight years of dividend growth; Essex Property Trust (ESS -1.25%), with 27; and Dividend King Federal Realty Investment Trust (FRT), at 54 consecutive years of raising dividends.

Below is a bit more on each of these Dividend Aristocrats.

Person with Elizabethan collar and some cash.

Image source: Getty Images.

Realty Income

Realty Income pays shareholders monthly and marked its 26th straight year of raising dividends by doing so five times in 2021, culminating with an increase of $0.0005 from November to December, ending the year with a monthly dividend of $0.2465 and an annualized payout of $2.96, good for a yield of 4.30% based on a Dec. 22 share price of $69.15. 

Further burnishing that record: Realty Income has offered 617 straight months -- more than 51 years -- of paying out dividends. With a market cap just north of $38 billion, San Diego-based Realty Income leases to more than 650 operators in all 50 states, Puerto Rico, Guam, the U.K., and Spain. Its top five clients are 7-Eleven, Walgreens, Dollar General, FedEx, and Dollar Tree/Family Dollar.

Essex Property Trust

Essex Property Trust declared a first-quarter dividend increase of $0.112 per share to its current $2.09 dividend, continuing the regular raises the company has given shareholders since it went public in 1994 with a portfolio of 16 multifamily communities. The dividend was good for a yield of 2.45% based on a Dec. 22 price of $343.63 per share.

Now with a market cap of $22.4 billion, Essex is a buyer, developer, and manager of about 60,000 apartments it owns or co-owns primarily in Southern California and the San Francisco Bay and Seattle areas. 

Federal Realty Investment Trust 

In September, Federal Realty raised its quarterly dividend by $0.01 per share to $1.07, keeping intact a run of annual payout increases dating back more than a half-century. It has a market cap of about $10 billion and a yield of 3.26% based on a Dec. 22 price of $132.59 per share.

Its payout record also makes it the lone REIT in the list of about 30 Dividend Kings in the S&P 500, or those companies that have raised their dividends for at least 50 straight years. Federal Realty offers investors a portfolio of 106 properties that include more than 3,100 clients (mostly retailers) and 3,200 residential units in major coastal markets such as San Francisco, Los Angeles, Boston, and Washington, D.C., near its home office in North Bethesda, Maryland.

Slowly but surely, it all adds up

Those tiny annual raises add up slowly, but they do add up. And the determination these three REITs show to keep their payout streaks going, even through the darkest days of the pandemic, speaks to the resilience and consistency any or all of them can add to an investor's portfolio.

Marc Rapport has no position in any of the stocks mentioned. The Motley Fool owns and recommends FedEx. The Motley Fool has a disclosure policy.

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