3 Brilliant REIT Stocks to Buy Now and Hold for the Long Term

The article highlights three REITs – Prologis (PLD), NNN REIT (NNN), and Public Storage (PSA) – as potentially attractive long-term investments for dividend income. Prologis, yielding 3.6%, benefits from e-commerce and data center growth; NNN REIT, yielding 5.5%, offers stability with a 36-year dividend increase streak and consumer-facing tenants; and Public Storage, yielding 3.9%, dominates the self-storage market but has inconsistent dividend growth due to expansion investments.

Analysis

The article presents Real Estate Investment Trusts (REITs) as accessible vehicles for generating dividend income from property ownership, emphasizing their obligation to distribute nearly all taxable income as dividends. Three specific REITs are highlighted for long-term consideration. Prologis (PLD), specializing in logistics and data center properties, benefits from the growth in e-commerce and digital infrastructure, owning approximately 5,900 buildings globally. It has demonstrated robust performance with an 11-year streak of dividend increases and double-digit profit and dividend growth over the past five years, currently yielding 3.6%. NNN REIT (NNN) is positioned for stability, boasting a 36-year history of uninterrupted dividend increases, including through economic downturns. It owns over 3,600 U.S. properties leased to consumer-facing tenants under triple net lease agreements, which enhance revenue predictability, and offers a 5.5% yield with an investment-grade balance sheet, though its growth is typically in the low to mid-single digits. Public Storage (PSA), the largest self-storage operator with over 3,400 facilities, has pursued aggressive expansion, investing $11 billion since 2019 to grow its portfolio by 35%. This expansion has led to inconsistent dividend growth, though sometimes supplemented by special dividends, and management's strategy is supported by a strong 'A' credit rating from S&P Global. PSA currently yields 3.9%, with analysts forecasting low to mid-single-digit growth amidst a sector sensitive to economic conditions and high tenant turnover. While the article is generally positive, it notes that Prologis was not among The Motley Fool Stock Advisor's top 10 current stock picks.

Key Decisions for Investors

• Investors seeking dividend growth and exposure to e-commerce and data center trends might consider Prologis (PLD), while noting its 3.6% yield and the analyst's observation it wasn't a top current pick.
• For those prioritizing high current income and dividend consistency, NNN REIT (NNN) with its 5.5% yield, 36-year dividend growth streak, and stable consumer-focused tenant base, could be attractive despite modest growth prospects.
• Public Storage (PSA) may appeal to income investors comfortable with its 3.9% yield and the understanding that its dividend growth may be inconsistent due to strategic expansion, but who value its market leadership and strong credit rating.
• Given REITs' structure of distributing most taxable income, investors should evaluate these options based on their individual income needs, risk tolerance for growth variability, and desired exposure to specific real estate sub-sectors, performing due diligence on each company's long-term strategy and market position.