3 Reasons to Buy High-Yield Rexford Stock Like There's No Tomorrow

The S&P 500 (SNPINDEX: ^GSPC) is providing a tiny yield of just 1.2%. That's just not enough to get the job done for most income-focused investors. In fact, it's not even close to the 4% withdrawal rate rule of thumb that investors use in retirement.

But Rexford Industrial Realty's (NYSE: REXR) 4.1% yield is right in the sweet spot. Here are three reasons to consider buying Rexford like there's no tomorrow.

1. Rexford is operating in an advantaged market

Rexford operates in Southern California and owns industrial real estate, such as warehouses. The vacancy rate in the region where the real estate investment trust (REIT) operates is around 4.8%, versus an average of roughly 6.6% for other major U.S. industrial markets. Having a lower vacancy rate is the norm for this region, at least partly because it is a key gateway between Asia and the United States.

Image source: Getty Images.

In fact, demand is so strong that industrial vacancy rates in Southern California tend to trend in a pretty tight band of around 420 basis points. That compares to 880 basis points for other industrial markets, which would represent a swing that's more than twice as large. Simply put, Rexford's 421 properties are in a very attractive market.

Some other key benefits of the region where Rexford calls home include limited supply and a trend for industrial properties to be converted to other uses, such as housing. And, as a REIT with access to capital markets, Rexford also has a leg up on smaller players in the space when it comes to inking and closing property deals.

2. Rexford has been taking advantage of the opportunity

Operating in a strong regional market for industrial assets isn't the whole story. It also provides Rexford with the leverage to raise lease rates. In the third quarter of 2025, the REIT signed 69 new leases with an effective rent increase over the previous lease of 25.6%. It signed 54 renewal leases, with an average increase of 26.5%. Clearly, the company's properties are in high demand.

That rental growth helped to push the REIT's core funds from operations (FFO) up 9% year over year in the third quarter. That's a strong number for a REIT, backed by an occupancy rate of 96.8%, up 60 basis points from the prior quarter.

All in, Rexford has been performing well as it makes good use of its many advantages.

3. Rexford has an attractive dividend

As noted, Rexford has an attractive 4.1% dividend yield. That's above the yield of the S&P 500 index and higher than the 3.9% REIT average. If that weren't enough, Rexford's yield is also toward the high end of its historical range.

If you are a dividend investor looking for a well-positioned company offering an attractive yield, Rexford should fit the bill. But don't forget about dividend safety. In this case, the dividend is backed by an investment-grade-rated balance sheet. The FFO payout ratio in the third quarter was a comfortable 72% or so.

Meanwhile, the dividend has been increased annually for 12 years. It grew by a huge 200% over the past decade. While that's probably not a rate that is sustainable over the long term, further dividend growth seems highly likely, given the advantaged nature of Rexford's business and its strong operating performance.

This could be a temporary opportunity

The big reason to act now and not wait for some future tomorrow is the tariff kerfuffle taking place today. Investors appear worried that global trade disputes will somehow diminish the opportunity for Rexford.

So far, that hasn't shown up in the company's results in any material way. In fact, it seems more likely that the world will adjust in time. After all, the United States is one of the most desirable markets in the world, given the consumer culture that seems to dominate in the country.

Buying now could get you into Rexford while it is still on sale, which means you'd collect a high yield and have the potential for attractive capital appreciation.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.