2 of My Favorite Dividend Stocks for the Next 10 Years

High dividend stocks as a group have generally underperformed their non-dividend counterparts over the past decade, and it's easy to see why. Not only has the market's performance been led by mega-cap technology stocks (most of which pay little or no dividends), but over the past two decades we've also experienced two prolonged rising-rate environments, with a global pandemic in between.

The latter conditions have been especially harsh for real estate investment trusts, or REITs. Real estate is one of the most rate-sensitive sectors for several reasons, plus the pandemic was largely devastating for the industry.

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However, the next decade could be another story. With interest rates falling, and expected to gradually fall further over the next few years, it could be a good time to take a closer look at some REITs for your long-term investment dollars. Here are two in particular that are at the top of my buy list right now.

A massive opportunity and excellent income

EPR Properties (NYSE: EPR) isn't exactly a household name, but it could be one of the best REITs to buy and hold for the next 10 years. If you aren't familiar, EPR invests in experiential properties, including theaters, waterparks, ski resorts, and eat & play properties, among others, where tenants sell experiences, not physical products.

EPR has been an underperformer due to uncertainty in the movie theater industry, but recent box office results suggest these fears may be overblown. Plus, after five years of intentionally slow growth due to the pandemic and high interest rates, EPR is finally ready to step on the gas when it comes to growth. Management estimates a $100 billion addressable market opportunity, so it will be exciting to watch the portfolio grow.

As of this writing, EPR has a 6.4% dividend yield, which is paid in monthly installments. And over the long term, the combination of dividends plus the upside potential from its investment strategy could result in market-beating total returns.

High demand and competitive advantages

Prologis (NYSE: PLD) is not only the largest industrial real estate investment trust (REIT), but it is one of the largest REITs of any kind in the market. The company primarily owns logistics properties, such as large-scale distribution centers, and as of the latest information it owns 1.3 billion square feet worth of rentable space in 20 countries around the world. Each year, $3.2 trillion in goods flow through Prologis distribution centers.

Although the core business is extremely strong and has lots of growth potential as e-commerce continues to expand, the company has been quietly establishing its presence in the data center industry. This is a new area for Prologis, but its expertise in other industrial properties translates well, and the company has already invested billions in data center development.

There are other data center operators, including some impressive pure play data center REITs. But Prologis has advantages of scale and financial flexibility. Its stellar balance sheet allows it to borrow money cheaper than peers and it has a massive amount of liquidity to pursue growth opportunities as they arise.

As of this writing, Prologis has a 3.1% dividend yield and trades at a reasonable 22 times funds from operations, especially given the massive data center potential and the company's recent all-time high in lease signings in 2025.

The bottom line is that these are two excellent dividend stocks that have dealt with unfavorable conditions for REITs for some time. As interest rates continue to trend lower and their management teams execute on their growth strategies, there's the potential for market-beating total returns for many years to come.

Matt Frankel, CFP has positions in EPR Properties and Prologis. The Motley Fool has positions in and recommends EPR Properties and Prologis. The Motley Fool has a disclosure policy.