Wall Street has a bad habit of getting sucked into short-term stories because they’re exciting. It’s just human nature, but it’s a habit that investors have to fight. Instead, you should focus on long-term value when buying businesses that can differentiate themselves, not just for a year or two, but for decades to come.

Here are four real estate investment trusts (REITs) that have what it takes to do just that.

1. Real estate income: size has its advantages

In 2021, Real estate income (NYSE:O) purchased one of its largest competitors, increasing the size of its portfolio to over 10,000 single-tenant net leasehold properties. In a net lease, the tenant is responsible for most of the operating costs of the property they occupy. On a large portfolio, this is a low-risk business model in the REIT industry. The acquisition essentially cemented Realty Income’s place as the industry’s market leader.

Realty Income now has the clout to take on huge portfolio transactions that its competitors couldn’t handle. And, given its large size (it has a market cap of $40 billion) and investment-grade credit rating, the REIT also has privileged access to capital markets. This will help Realty Income expand in Europe, which a market direction says is about twice as large as the net rental opportunity in the US, with only a fraction of the publicly traded competition. This should provide the REIT with years of growth, given that Europe is just beginning to adapt to the net rental approach and tends to favor strong, long-term relationships with large and reliable partners.

The current dividend yield is 4.1%, backed by a dividend that has been increased for over 25 consecutive years, making Realty Income a dividend aristocrat.

2. Prologis: Growth from scratch

One of the major current trends is the growth of online shopping, which requires additional distribution infrastructure. With a market cap of over $110 billion, Prologis (NYSE: PLD) is the name to beat in this sector. It has warehouses in key transportation hubs in North America, South America, Europe and Asia, containing nearly 1 billion square feet of space. It is a vital cog in the global marketplace and is associated with some of the biggest names in the world.

But what’s most exciting here is that over the past 20 years, Prologis’ capital investment efforts have generated an estimated internal rate of return of 20.8%. That’s no small feat, considering he’s invested $36.5 billion in cash in those building plans. And, looking to the future, it has enough properties to build an additional $21.1 billion in assets.

The stock is still quite expensive, yielding just 1.6% today, but keep it on your wishlist in case there is a sell-off. Prologis is not only the leader in warehouses, but it also has plenty of internal growth opportunities to continue rewarding investors for years to come.

DLR Dividend Yield Data by YCharts

3. AvalonBay Communities: Another Value Creator

Prologis actually benefited from the pandemic in 2020 as the shift to online shopping accelerated when people were asked to practice social distancing. However, the owner of the apartment AvalonBay Communities (NYSE:AVB) didn’t, as people moved out of the big cities that the business tends to focus on.

However, this trend has reversed and AvalonBay is once again recording strong occupancy and revenue levels. That said, the REIT has adapted to the pandemic as expected, working to keep occupancy as high as possible by granting concessions to customers. What is that does not have to do was to stop investing for the future.

At this point, the apartment barometer has $3.8 billion in capital investment projects underway, including redevelopment and new construction. The company estimates that these expenses will add up to $145 million to net operating income. This, in turn, will result in a greater ability to increase dividends, contributing to an increase in the fundamental value of the company. This is the kind of consistency that long-term investors should want to see in a business they own.

The 2.5% yield is on the low side, so it might also be best on the wishlist. But if there’s another sale, this is easily one of the best apartment owners you can own.

4. Digital real estate: a digital future

Prologis is a logistics company playing on the growing growth of purchases on the Internet, while Digital real estate (NYSE: DLR) is a play on the same general theme. This REIT has more than 290 data centers around the world, serving some 4,000 customers. It is a major consolidator, and it has just agreed to buy one of the largest data center providers in Africa. Digital Realty is well positioned to play an increasing role as more and more is done online.

Shares of the REIT have recently fallen around 10%, thanks to increased competition and a difficult pricing environment. Basically, many companies are trying to take advantage of what is likely to be a huge opportunity. The dividend yield is around 3%, which isn’t great but not really bad either, and it’s worth mentioning that Digital Realty has increased the dividend every year for 17 consecutive years.

And, as noted, Digital Realty is a consolidator, which means today’s competition could become an acquisition target tomorrow as this major industry player continues its global expansion.

Don’t look now – look ahead

For investors looking to own great dividend-paying REITs, you should start by looking at the company first, then considering the dividend and yield. Realty Income, Prologis, AvalonBay and Digital Realty are all large companies with significant growth opportunities ahead of them.

Realty Income, with its generous current yield, and Digital Realty, with a recent price drop, might be attractive today, while the other two are more suitable for the wishlist. But all are names you could comfortably hold for years as they continue to execute long-term plans to reward investors via company growth. This is what makes them obvious investment opportunities.