This magnificent dividend stock has delivered a total return of 3,880% since 1994 (and could make you richer in the future)

Mid-America Apartment Communities (MAA -0.70%) it was a fantastic investment over the years. The apartment-focused real estate investment trust (REIT) has delivered a total return of 3,880% since its initial public offering (IPO) 30 years ago (nearly 12.8% annualized).

Its magnificent dividend payment record is an important factor behind these strong returns. It recently declared its 123rd consecutive quarterly payout. The Residential REIT it has never reduced or suspended its dividend. Although he did not increase his pay every yearhis current streak is up to 14 consecutive years.

With more growth ahead, REIT should be able to continue to grow the wealth of its investors in future.

Focused on where people move

Mid-America Apartment Communities, or MAA, owns more than 100,000 apartment units in 16 stay over Southeast, Southwest and Mid-Atlantic regions. It owns properties in large and mid-sized markets such as Atlanta, Dallas, Nashville and Charleston. They focus on these markets because they are where people migrate due to abundant jobs, better weather and more affordable housing options.

These factors are keeping occupancy levels high and driving healthy rent growth. MAA delivered an average of 4.3% to the same store net operating income (NOI) growth over the past decade. This exceeded its equal average by 3.6%.

While rent growth has slowed to a crawl this year due to an increase in new apartments in many of it markets, the REIT expects this headwind to fade. CEO Eric Bolton noted in the second quarter earnings release:

New supply in several of our markets continues to be absorbed in a constant manner as demand for apartment housing remains strong. We continue to believe that we will begin to see a decline in new apartment deliveries in the back half of this year and into 2025.

Because of this, the REIT should see a re-acceleration in rent growth in the coming quarters.

Multiple catalysts for additional growth

Rising rents are just one catalyst for REITs. MAA also invests in development projects, spends money on renovations and redevelopments, and makes acquisitions. These investments further enhance its ability to grow its earnings, dividends and shareholder value.

MAA is at present investing $866.2 million in seven active development projects to add 2,617 new apartment units across multiple markets. These projects should stabilize over the next three years and add $55 million to $65 million to NOI annually. In addition, the company expects to start four to six more development projects in the next 18 to 24 months.

REITs also typically invest money to upgrade existing properties to lead higher rent. It has about 9,000 units in its portfolio that it could redevelop in future by modernizing kitchens and bathrooms. These high-return projects have historically driven single- to double-digit rent increases.

MAA will also make acquisitions as compelling opportunities arise. For example, the REIT bought a 366-unit multifamily community in the rental phase for $81 million in the second quarter. This is one of three recently completed communities it recent bought from developers. The company has an elite balance sheet, giving has broad financial flexibility to continue purchasing properties as it finds attractive investments. It will also buy land for future developments and finance development projects it will buy from builders.

The REIT aims to increase its core funds from operations (FFO) per long-term action. This should allow it to further increase its dividend and provide superior returns for shareholders. This strategy has paid dividends for shareholders over the years, given the REIT’s growing payouts and totally strong returns (its total return over the past five, 10, 15 and 20 years have all exceeded the average of its multifamily peers).

Well positioned to continue enriching investors

MAA has done a magnificent job of growing value for its shareholders over the past 30 years. It has done this by focusing on owning apartments that people want to live in, which has led to above-average rent growth and abundant opportunities to expand its portfolio. The REIT still has plenty of growth ahead of it, which suggests it can continue to make investors rich in future. Add in its attractive dividend yield (nearly 4%) and cheaper valuation (17.6x FFO multiple vs. 19x peer average), and MAA is a potentially very rewarding investment opportunity these days.