Which Dividend-Paying Equities Deserve a Spot in Your Forever Portfolio?

Question

When it comes to building wealth through passive income, the best stocks to buy aren’t always the flashiest performers. Historical data tells an interesting story: according to Ned Davis Research and Hartford Funds, dividend-paying stocks within the S&P 500 have outpaced their non-dividend-paying peers by more than 2x over the past five decades. Even more compelling, companies that consistently raise their payouts have delivered the strongest returns.

Why REITs Are the Dividend Darling

Real estate investment trusts occupy a unique position in the income-focused investor’s toolkit. These instruments distribute income by design—they’re required to return 90% of taxable income to shareholders, making them naturally high-yielding vehicles. Within this sector, three standout candidates have demonstrated the staying power that turns good investments into generational wealth builders.

Extra Space Storage: The Self-Storage Giant’s Steady March Upward

Extra Space Storage (NYSE: EXR) dominates American self-storage with a commanding 15.3% market share. The company oversees approximately 4,200 facilities spanning more than 322 million rentable square feet. Its ownership structure is deliberately diversified: 48% owned outright, 11% held through joint ventures, and 41% under management agreements for other operators.

This mixed model generates dual revenue streams. Owned properties deliver growing rental income, while managed properties generate recurring fees—a buffer against market volatility. The company has aggressively expanded through acquisitions, including the $15 billion purchase of Life Storage in 2023, redevelopment projects, and a bridge lending platform that funds new self-storage developments.

The payoff? Over the past decade, Extra Space Storage has grown its payout by more than 110%, currently yielding above 6%. The company’s fortress balance sheet provides ammunition for continued acquisitions and dividend increases. Perhaps most tellingly, this best stocks to buy candidate has delivered a staggering 2,400%+ total return over 20 years—the third-best performance across the entire REIT sector.

Realty Income: The Dividend Aristocrat’s 112-Quarter Streak

Realty Income (NYSE: O) operates on a different philosophy. As the world’s sixth-largest REIT, it owns over 15,000 properties globally, focusing exclusively on long-term net lease arrangements. This structure shifts operating expenses—maintenance, taxes, insurance—to tenants, locking in stable, predictable cash flows for the REIT.

The track record speaks volumes: 112 consecutive quarters of dividend increases, translating to a 4.2% compound annual growth rate across three decades. With a current yield of 5.7%, investors receive immediate income while benefiting from systematic payout growth. The result has been a 13.7% compound annual total return for shareholders.

Realty Income remains positioned for ongoing expansion with $14 trillion in addressable market opportunity across global net-lease real estate. Its fortress balance sheet ranks among the sector’s strongest, suggesting dividend growth will persist.

Rexford Industrial Realty: The Southern California Play With Momentum

Rexford Industrial Realty (NYSE: REXR) operates a geographically focused strategy—420 properties concentrated in Southern California’s 51 million-square-foot industrial base. This specialization isn’t a limitation; it’s a feature. Southern California benefits from one of Earth’s highest-demand industrial corridors, combined with chronically tight supply.

The result: occupancy stays elevated while rent growth accelerates. Fresh lease signings this year averaged 23.9% above prior rates with 3.6% embedded annual escalations built in. Over five years, this best stocks to buy candidate has increased its dividend at an impressive 15% compound annual rate. With robust demand fundamentals and a strong balance sheet, the company’s 4.2%-yielding dividend appears sustainably positioned for future expansion.

The Verdict: REITs as Lifetime Income Engines

Selecting stocks for the long term requires identifying businesses with durable competitive advantages and commitment to shareholder returns. Extra Space Storage, Realty Income, and Rexford Industrial Realty exemplify this ideal. Each combines:

A demonstrated history of increasing distributions
Underlying economic tailwinds supporting future growth
Balance sheet strength enabling reinvestment and acquisitions
Business models that naturally generate rising cash flow

For investors seeking the best stocks to buy that can generate reliably growing income across decades, these REITs merit serious consideration.