I'm a buy-and-hold investor at heart. Because of that, several stocks have been in my portfolio for more than a decade. Two of my longest-held positions are Medical Properties Trust (NYSE: MPW) and Annaly Capital Management (NYSE: NLY). I started buying these real estate investment trusts (REITs) in 2007.
Overall, my decision to hold these REITs for the long haul has paid off reasonably well. Here's a look at why I've kept them in my portfolio all these years.
A great dividend growth stock
According to my records, I bought my first shares of Medical Properties Trust in August of 2007. I've steadily added to my position in the healthcare REIT over the years, including recently putting another $500 into the stock. It's currently my largest REIT holding.
My investment in Medical Properties Trust has turned out quite well. My initial investment has generated a 372.7% total return, or 11.7% annualized, which has outpaced the S&P 500's 10.6% total return during that time frame. Most of my subsequent investments also delivered strong returns, especially those I made below my initial purchase price when shares sold off over the years.
One of the things I like most about Medical Properties Trust is the dividend. It has increased the payout in each of the last eight years, growing it at a 5% annual rate. Because of that, while the stock currently yields 5.4%, the yield on my total investment is now up to 8.3%.
The REIT has really seemed to hit its stride in recent years. Since 2019, it has acquired $11.7 billion of hospital real estate, growing its asset base by 121%. These deals have created an estimated $3.8 billion of shareholder value. With a strong financial profile, Medical Properties should be able to continue acquiring hospitals in the coming years. That would allow the REIT to keep growing its dividend, enabling me to earn more passive income from this investment.
A decent income stream
I also started buying shares of mortgage REIT Annaly Capital Management in 2007. However, I stopped adding to my position about a decade ago.
This investment hasn't paid off quite as well as Medical Properties Trust. Overall, my initial purchase has produced a 234% total return, 8.9% annualized, which has underperformed the S&P 500's 10.6% annualized return. Meanwhile, most of my subsequent purchases have also lagged the broader market.
That's due to poor timing on my part, considering that Annaly has an excellent track record of creating shareholder value. It has beaten the S&P 500's total return by more than one-and-a-half times since its initial public offering in 1997. A significant driver of that return has been Annaly's dividend. The REIT has paid out more than $20 billion to shareholders since its IPO.
The dividend is why I continue holding Annaly. While the payout has fluctuated over the years due to the impact interest rates have on the mREIT's business, it generates a decent amount of passive income for my portfolio. I use that money to buy other stocks that I like better.
I've considered selling my shares and redeploying the capital into a REIT I like better. However, I trust Annaly's management team and still think they can continue cranking out dividend income for my portfolio. Because of that, I plan to keep holding until I need that capital for something else.
Solid passive income producers
REITs have historically been excellent long-term investments. That has certainly been the case with Medical Properties Trust during the more than a decade it has been in my portfolio, thanks in large part to its growing high-yield dividend. Meanwhile, even a laggard like Annaly has generated solid income, which is why I keep holding.