The Overlooked Dividend Stock That Has Grown Its Payout for 12 Straight Years

Shares of Rexford Industrial Realty (NYSE: REXR) are down more than 1% this year. The real estate investment trust (REIT) focuses strictly on Southern California infill industrial properties: warehouses, distribution facilities, and light manufacturing buildings located inside densely populated markets, where the land is almost fully developed.

The stock is overlooked because it is a mid-cap stock, with a market cap of $8.76 billion, and isn't a flashy artificial intelligence (AI) investment, a tech stock, or a turnaround story. It also tends to be dismissed by investors as too concentrated because its properties are all in Southern California. However, instead of seeing that as a risk, realize the company has some monopolistic advantages.

Here are three reasons Rexford is a good stock to buy right now.

Strong dividend growth, low payout ratio

The company has increased its dividend for 12 consecutive years, including a 1.2% raise in 2026 to $0.435 per share quarterly, and yields 4.52% at its current share price, more than 4 times the S&P 500 average. The company has increased its dividend by 222% over the past decade.

The dividend appears safe, as the company has made a point of keeping its funds from operations (FFO) payout ratio low, currently around 69%, well within the safety guidelines for REITs, which are required to pay out at least 90% of taxable income in dividends.

Moatlike advantages in Southern California

Unlike REITs that have to constantly buy properties to keep growing, Rexford can reliably raise rents because warehouse space is tight in Southern California, particularly in properties designed for logistics, as Rexford's are. Severe physical and zoning barriers to entry for competitors mean virtually no competing land can be developed, insulating Rexford's properties from oversupply risks and ensuring durable long-term occupancy.

In the second quarter, the company averaged 95.7% property portfolio occupancy. Core FFO (FFO adjusted for acquisitions and disposals) per share was $0.63, up 6.8% year over year. It is expecting yearly core FFO per share between $2.38 and $2.43, up from earlier estimates of $2.37 to $2.42.

The company is making its shares more valuable

Rexford is selling off some of its lesser-performing properties and has sold or is under contract for nearly $1.5 billion of dispositions year to date. It has said it will use some of the money for stock buybacks. The company authorized a $1 billion share repurchase program, directly expanding core FFO per share and improving its dividend coverage ratio without adding balance sheet risk.

High interest rates are a concern for all REITs, but Rexford is also paying down its debt, which was listed at $3.3 billion in the second quarter. It has already brought its ratio of net debt to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to a conservative 4.5x, thereby insulating the company against high interest rates. Selling off more properties will further reduce its net-debt-to-adjusted-EBITDA ratio.

James Halley has no position in any of the stocks mentioned. The Motley Fool recommends Rexford Industrial Realty. The Motley Fool has a disclosure policy.