Strategic Dividend Growth Through Self Storage REITs and Industrial Real Estate

Why Dividend-Paying Stocks Outperform

Research from Ned Davis Research and Hartford Funds reveals a compelling truth: companies in the S&P 500 that distribute dividends to shareholders have significantly outpaced non-dividend payers over the past five decades. The standout performers have consistently been those that expand their payout ratios year after year. The REIT sector has emerged as a particularly attractive hunting ground for investors seeking high-yield, steadily appreciating returns, particularly within self storage REITs and industrial real estate segments.

Rexford Industrial Realty: Southern California’s Growth Engine

Rexford Industrial Realty (NYSE: REXR) dominates Southern California’s warehouse and logistics space. Managing 420 facilities across 51 million square feet, the company benefits from one of the world’s tightest industrial real estate markets. Supply constraints combined with robust e-commerce demand create an environment where lease renewals consistently reach premium pricing.

Recent contract signings showcase this dynamic: leases executed this year averaged 23.9% above previous rates, with built-in annual escalations of 3.6%. This pricing power has translated into impressive dividend growth—the company has expanded payouts at a 15% compound annual rate over the past five years. With a 4.2% current yield and ongoing portfolio expansion through development and acquisition, Rexford is positioned for sustained distribution increases.

Extra Space Storage: Scaling the Self-Storage Opportunity

The self storage REIT landscape is led by Extra Space Storage (NYSE: EXR), which operates or oversees nearly 4,200 facilities containing over 322 million square feet—representing 15.3% of the U.S. market. Its diversified ownership model combines directly-held properties (48%), joint venture interests (11%), and third-party managed portfolios (41%), creating multiple revenue streams.

The company’s acquisition strategy has accelerated growth, including its 2023 purchase of Life Storage for $15 billion. This expansion engine has fueled a dividend increase exceeding 110% over the past decade. Currently yielding above 6%, Extra Space Storage boasts a fortress balance sheet enabling continued portfolio growth. Its 20-year total return of 2,400% ranks among the sector’s elite performers, demonstrating how consistent dividend growth compounds wealth over time.

Realty Income: The Dividend Aristocrat

Realty Income (NYSE: O) operates as the world’s sixth-largest REIT, controlling over 15,000 properties spanning retail, industrial, gaming, and other commercial segments across North America and Europe. The company’s business model centers on net leases, where tenants assume responsibility for maintenance, taxes, and insurance—creating predictable, recession-resistant cash flows.

This stable income foundation has powered 112 consecutive quarterly dividend increases, representing four decades of uninterrupted growth at a 4.2% compound annual rate. The current 5.7% yield combines with this growth trajectory to deliver 13.7% annualized total returns. With a $14 trillion addressable market in global commercial real estate and one of the sector’s strongest balance sheets, Realty Income’s dividend expansion should remain on track.

Long-Term Wealth Building Through REITs

The convergence of high current yields, documented dividend growth histories, and sector tailwinds makes self storage REITs and specialized industrial properties compelling long-term holdings. Extra Space Storage, Realty Income, and Rexford Industrial Realty each demonstrate the power of selecting quality dividend stocks and allowing compound growth to work across decades. For investors prioritizing passive income and capital appreciation, these REITs represent ideal vehicles for building sustainable wealth.