Want Decades of Passive Income? 3 Stocks to Buy Now

Want Decades of Passive Income? 3 Stocks to Buy Now

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Investing in real estate is a popular method of generating passive income. However, you don't need to buy a rental property to earn income from the sector. A much easier option is to invest in a real estate investment trust (REIT).

Prologis (NYSE: PLD), Realty Income (NYSE: O), and Camden Property Trust (NYSE: CPT) are excellent REITs for those seeking to collect durable income. Here's why they stand out as great income options.

Cashing in on growing warehouse demand

Prologis is the leading industrial REIT. The company owns interests in over 5,600 warehouses across North and South America, Europe, and Asia. It leases space in its warehouses to tenants across various industries. Those leases supply it with steady rental income. It uses that money to pay a growing dividend (currently yielding 2.6%) and invest in expanding its portfolio.

Demand for warehouses is durable and growing, driven by the rising adoption of e-commerce. Prologis is in an excellent position to capitalize on this trend. It owns a vast land bank that could support $40 billion of future development. The company also has an elite balance sheet, giving it the financial flexibility to invest in development projects and make acquisitions.

Prologis' growth drivers and financial strength should enable it to continue boosting its dividend. It has increased its payout at a more than 12% compound annual rate over the last five years, double the pace of the S&P 500. Given its financial strength and catalysts, it should be able to continue lifting its dividend in the decades to come.

Built to generate income

Realty Income built its business to support dependable monthly dividends that rise over time. The diversified REIT owns 13,250 retail, industrial, gaming, and other properties across the U.S. and Europe. The company focuses on properties leased to tenants immune to disruption from e-commerce and economic downturns (e.g., grocery stores and warehouses). These features enable it to generate very durable rental income to support its 5.9%-yielding dividend.

The REIT has increased its monthly payout 123 times since its public market listing in 1994, including for the last 105 straight quarters. Realty Income expects to continue boosting its dividend in the future.

The company aims to grow its adjusted funds from operations (FFO) by 4% to 5% per year. Growth drivers include rising rental rates, acquisitions, and development projects. Realty Income has an elite balance sheet and low dividend payout ratio, giving it the flexibility to continue expanding its portfolio and increasing its monthly dividend. It's routinely adding new growth platforms, including recently making its first investments in data centers and new European markets.