Want decades of passive income? 3 Stocks to Buy Now and Hold Forever.

If you’re an income investor, dividend yield is probably one of the first things you look at when examining a potential stock for your portfolio. It makes sense, but yield alone isn’t enough to determine whether a company is good enough to own. provide decades of passive income.

For example, a stock like AGNC Investments (AGNC 1.16%) which has a whopping 13% dividend yield, is a terrible choice for most passive income investors. Meanwhile, with lower yield Real estate income (A 0.39%), Toronto-Dominion Bank (T.D -0.14%)and Alexandria Real Estate Equities (I AM 1.82%) here are three great options to add to your portfolio right now. Here’s why.

The problem with ultra-high yields

AGNC Investment is not a bad company. But this mortgage real estate investment trust (REIT) is complex and focuses on total return, not dividends. Yes, the yield is huge at over 13%, but don’t get carried away by the dividend yield. If you want to know why, look at the chart below.

AGNC data by YCharts.

Dividends have been falling for a decade! The share price has followed the dividend down, which is why, despite a terrible dividend history, the yield is so high. Sure, you’re still collecting a dividend, but less income and a loss of capital isn’t what most passive income investors really want.

1. Real estate income is a core holding

Realty Income, on the other hand, has increased its dividend every year for 29 consecutive years. The yield is a very convincing 5.1%. And the net lease REIT has a solid investment track record.

It also happens to be the largest player in its property niche with a mammoth portfolio of over 15,400 assets. It is roughly four times larger than its closest peer by market capitalization. Its portfolio spans North America and Europe, giving it plenty of leverage for growth.

To be fair, Realty Income is a slow and steady turtle, but it can provide a solid foundation for your income-focused portfolio.

2. Toronto-Dominion Bank is a contrarian piece

Toronto-Dominion Bank, or just TD Bank, is one of Canada’s largest banks. That country’s banking regulations are very strict and create conservative cultures in Canadian banks like TD Bank.

The strict rules effectively give consolidated positions to the biggest banks. So overall, TD Bank is very reliable, noting that it has paid a dividend every year since 1857. Most companies haven’t even been around that long. The dividend yield is an attractive 4.6%, which is at the top of the bank’s historical yield range.

Why is the yield so high for such a conservative and reliable dividend stock? Well, TD Bank is facing some legal and regulatory issues related to its internal money laundering controls. It’s not good news, and it looks like a few bad apples have landed the bank in hot water.

However, the company believes that the problem will be resolved by the end of 2024. Growth may be slow for a while, but given the company’s long history of success, it seems like this is a contrarian play that most investors with passive income should consider. right now.

3. Alexandria Real Estate Equities gets tarred with the wrong brush

It’s hard to put Alexandria Real Estate Equities into one category. On the one hand, this REIT holds healthcare assets that likely have a bright future. On the other hand, it owns offices, which have performed terribly since the pandemic.

Wall Street appears to be erring on the side of caution and treating Alexandria like an office REIT, pushing the stock lower and the yield to an all-time high of 4.2%. You should take the opposite view and look at it as a healthcare REIT.

The nuance here is important. Alexandria has medical research facilities. Yes, these are offices, but they are also laboratories. You cannot divorce the laboratory space from the office space, as both are vital to the development of new medical advances. To put it simply, researchers can’t really log into a computer writing their findings in the same place they’re playing with chemicals.

Alexandria Real Estate Equities is a pure play in the medical research sector and has a 14-year history of annual dividend increases. The time to buy this misunderstood REIT is now if you want decades of reliable income.

Don’t go broke with high dividend yields

If you want to generate decades of reliable income, you need to be careful not to get caught up in a hunt for yield. You need to find companies with good returns and proven track records that show they can sustain their dividends over the long term. Realty Income, TD Bank and Alexandria are offering just that today.