1 Magnificent High Yield Dividend Growth Stocks Down 40% to Buy and Hold Forever

Investors looking for dividend growth wouldn’t normally expect to find it in the real estate investment trust (REIT) sector. But sometimes there are gems that are overlooked because they don’t conform to the norms. Rexford Industrial Realty (REXR -2.01%) it’s just genre-defying action. Here are three reasons why this is a magnificent high-yielding dividend growth stock that you’ll want to consider buying and holding forever.

1. Rexford’s yield is attractive

To get to the bad news first, Rexford Industrial’s yield is slightly below average for a REIT. Rexford’s dividend yield is 3.3%, while the average REIT yields about 3.7%. However, when you compare the Rexford to the wider market, it looks much better. This yield of 3.3% is almost three times higher than that S&P 500 the index’s low yield of 1.2%.

REXR data by YCharts

And thanks to a dramatic decline in Rexford’s share price, the dividend yield is also near a decade high. So you can find higher yielding REITs, but Rexford’s yield still looks pretty attractive both on an absolute basis and relative to its own history.

2. Rexford’s dividend growth is extremely attractive

You can’t just look at Rexford Industrial’s performance and call it a day. The most impressive dividend REIT statistic is the dividend growth rate it has achieved over the past decade. REITs are generally known as slow and steady growers; a dividend growth rate in the mid-single digits is usually considered pretty good. Rexford’s dividend has expanded at an annual rate of 13% over the past decade. That would be a big number for any company, but it’s downright phenomenal for a REIT.

REXR Dividends per Share (Quarterly) data by YCharts

When you add the dividend growth to the yield, it becomes clear that Rexford is a very attractive growth and income stock. In fact, over the past 10 years, the dividend has grown from $0.12 per share per quarter (in 2013) to $0.4175 per share (in 2024). That’s a nearly 250% jump, something almost any dividend investor would appreciate.

3. Rexford’s business model is differentiated

Rexford is an industrial REIT, which is not particularly special in any way. However, it has a unique geographic focus that sets it apart from its peers. Unlike most industrial REITs, which focus on diversification, Rexford went all-in on the Southern California market. That’s right — only invest in one region of the United States. There is a clear risk in this approach, but given the company’s strong dividend history, the management bets have paid off.

It’s actually not too shocking if you step back and examine the Southern California market. It is the largest industrial market in the United States and ranks 4th in the global market. In particular, it is an important gateway for goods coming to North America from Asia. Being a critical piece in the global supply chain has led to high demand, with the Southern California region having a dramatically lower vacancy rate than the rest of the country. Add in supply constraints and Rexford has been able to sharply increase rates on expiring leases in recent quarters.

Add this tailwind to the REIT’s development plans and acquisitions, and you have a REIT that looks set to continue to reward investors handsomely for years to come.

Dividend growth investors should buy Rexford while they can

So why is Rexford stock down about 40% from its all-time highs? The answer really comes down to investor sentiment, which has been somewhat overheated during the coronavirus pandemic as demand for warehouse space has increased with online shopping. Although the excitement has died down, Rexford’s business continues to do well. If you are a dividend growth investor, you should consider buying Rexford and holding for a very long time.