The Best Dividend Growth Stocks to Buy During Market Shifts

If you’re looking for sustainable income and long-term wealth building, dividend-paying stocks deserve serious attention. Not all dividend stocks are created equal, though. The real winners are those that have consistently grown their payouts year after year, demonstrating both financial strength and management confidence. Three exceptional companies stand out as stocks to buy right now for investors seeking reliable income with meaningful growth potential: Realty Income (NYSE: O), Mid-America Apartment Communities (NYSE: MAA), and Rexford Industrial Realty (NYSE: REXR). All three are real estate investment trusts (REITs) that have built impressive track records of raising dividends while maintaining fortress-like balance sheets.

Three Different Paths to Dividend Growth

What makes these three companies compelling stocks to buy is how they represent different yet equally valid strategies for delivering growing income. Realty Income has been the marathon runner, methodically increasing its monthly dividend 133 times since going public in 1994—including 113 consecutive quarters of increases. Its 4.2% compound annual dividend growth over three decades speaks to unmatched consistency. Mid-America Apartment Communities, meanwhile, has extended a 16-year streak of consecutive dividend hikes, growing payouts at a 7% compound annual rate over the past decade. Rexford Industrial Realty has pursued an acquisition and development-driven strategy, achieving an impressive 15% compound annual dividend growth over just the last five years. Each approach reflects a different risk-reward profile for income seekers.

The Income Generation Capabilities

Examining the current yield environment helps explain why these remain attractive stocks to buy. Realty Income currently offers a 5.7% yield supported by a conservative 75% payout ratio of adjusted funds from operations—meaning it retains substantial cash for reinvestment and growth. Mid-America Apartment Communities provides a 4.5% yield while maintaining a low payout ratio that preserves financial flexibility. Rexford Industrial Realty rounds out the trio with a 4.2% yield. The yields alone make each compelling, but what sets them apart is the sustainability of these income streams backed by growing real estate fundamentals rather than unsustainable distribution policies.

Financial Strength and Development Momentum

Each company demonstrates the financial stability required for stocks to buy and hold indefinitely. Realty Income maintains one of the strongest balance sheets in the REIT sector and has deployed nearly $97 billion in potential investment opportunities through the third quarter, carefully selecting the best deals rather than chasing volume. Mid-America Apartment Communities currently has seven communities under active development representing nearly $800 million in capital deployment, with additional land acquisitions in Kansas City and Arizona positioning the company for future projects. Rexford Industrial Realty, focused on Southern California industrial properties, has embedded growth potential built into its existing leases, which escalate at a 3.7% average annual rate and will add approximately $105 million in annual net operating income as they reset. Development and repositioning projects add another projected $70 million, with additional upside from market rent growth potentially contributing $20 million more.

The Embedded Growth Advantage

What separates these three from ordinary dividend payers is the substantial growth already embedded within their operations. Realty Income operates across diverse property types—retail, industrial, gaming, and others—secured by long-term net leases across the U.S. and Europe, with $14 trillion of suitable real estate available for expansion. Mid-America Apartment Communities has demonstrated the ability to deploy capital effectively into development and acquisitions while maintaining investment-grade balance sheet metrics. Rexford’s lease escalations and redevelopment pipeline suggest dividend growth could accelerate further, with management’s own figures implying a 28% increase in net operating income from current operations before any accretive acquisitions. This combination of current yield, historical growth, and forward-looking development potential makes these stocks to buy for investors who want growing income, not stagnant distributions.

Why History Validates This Strategy

The investment case extends beyond current conditions. Dividend-paying stocks have historically delivered significantly higher total returns than non-dividend payers, and the best results have come from dividend growers. Over the past 20 years, Mid-America Apartment Communities has delivered a 9.6% compound annual total return, while Realty Income has achieved 13.7% average annualized total return over three decades. These aren’t flashy returns that make headlines, but they represent the kind of dependable wealth-building that survives market cycles. History shows that companies willing to increase dividends during downturns—Mid-America has never suspended or reduced its payout in over 30 years as a public company—tend to outperform over extended periods.

The Bottom Line for Long-Term Investors

For investors building a portfolio of stocks to buy and hold through various market environments, these three REITs offer a compelling combination: proven dividend growth capability, strong financial flexibility, substantial development pipelines, and embedded income growth from existing operations. They represent different strategic approaches—consistency, disciplined growth, and acquisition-driven expansion—yet all have delivered measurable results. The companies that increase their dividends consistently have historically been among the market’s best performers, and these three appear well-positioned to continue their track records. That combination of current income, growth potential, and financial stability makes them logical choices for any serious income investor’s portfolio.