This High-Yield Dividend Stock's 37-Year Streak of Dividend Increases Makes It a Lifetime Passive Income Machine

NNN REIT (NYSE:NNN) extended its dividend growth streak to 37 consecutive years earlier this summer. That's the third-longest streak among real estate investment trusts (REITs), which is quite impressive considering that there are around 180 publicly traded REITs. At its current dividend rate and share price, NNN REIT yields 5.6%, which is well above the S&P 500's 1% yield and the 4% average in the REIT sector.

The high dividend REIT is in a strong position to continue growing its payout, making this passive income machine a stock you'll want to hold for a lifetime.

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Built to deliver a growing dividend

NNN REIT raised its dividend by 3.3% this past July to $0.62 per share each quarter ($2.48 annualized). It can easily afford to pay that higher rate. The REIT expects to generate between $3.55 and $3.59 per share of adjusted funds from operations (AFFO; a REIT proxy for free cash flow). That puts its dividend payout ratio at around 70%, a conservative level for a REIT.

The REIT generates very stable cash flow backed by its high-quality portfolio, featuring nearly 3,800 net-lease retail properties across the country. They have a weighted-average remaining lease term of more than 10 years, providing long-term visibility into future rental income. NNN REIT also has a conservative, investment-grade balance sheet.

NNN REIT's durable portfolio and conservative financial profile have enabled it to weather multiple recessions and real estate downturns. It can self-fund around $550 million in new acquisitions each year through a combination of post-dividend free cash flow, non-core property sales, and new debt, while maintaining its financial strength. That's enough to grow its AFFO per share by about 3.5% annually. Meanwhile, it has a long growth runway, given the estimated $2.6 trillion size of the U.S. freestanding retail real estate market.

NNN REIT might not be the flashiest dividend stock, but it has delivered consistent dividend growth for 37 straight years. It's in a rock-solid position to continue growing its dividend for many more years to come, making it an ideal high-yield dividend stock to hold for a lifetime of passive income.

Matt DiLallo has positions in NNN REIT. The Motley Fool has positions in and recommends NNN REIT. The Motley Fool has a disclosure policy.