Mid-America Apartment Communities (NYSE: MAA) has been a fantastic investment over the years. The apartment-focused real estate investment trust (REIT) has delivered a 3,880% total return since its initial public offering (IPO) 30 years ago (nearly 12.8% annualized).

Its magnificent record of paying dividends is a big factor driving those strong returns. It recently declared its 123rd consecutive-quarterly payment. The residential REIT has never reduced or suspended its dividend. While it hasn’t increased its payment every year, its current streak is up to 14 consecutive years.

With more growth ahead, the REIT should be able to continue growing its investors’ wealth in the future.

Focused on where people are moving

Mid-America Apartment Communities, or MAA, owns over 100,000 apartment units in 16 states across the Southeast, Southwest, and Mid-Atlantic regions. It owns properties in large and mid-tier markets like Atlanta, Dallas, Nashville, and Charleston. It focuses on these markets because they are where people are migrating due to abundant employment, better weather, and more affordable housing options.

Those factors keep occupancy levels high and drive healthy rent growth. MAA has delivered an average of 4.3% same-store net-operating income (NOI) growth over the past decade. That has outperformed its peer average of 3.6%.

While rent growth has slowed to a crawl this year due to a surge in new apartments in many of its markets, the REIT expects that headwind to fade. CEO Eric Bolton noted in the second-quarter earnings release:

Because of that, the REIT should see a re-acceleration in rent growth in the coming quarters.

Multiple additional-growth catalysts

Rent growth is only one catalyst for the REIT. MAA also invests in development projects, spends money on renovations and redevelopments, and makes acquisitions. Those investments further enhance its ability to grow its earnings, dividend, and shareholder value.

MAA is currently investing $866.2 million across seven active development projects to add 2,617 new apartment units across several markets. Those projects should stabilize over the next three years and add $55 million to $65 million to its annual NOI. In addition, the company expects to start four to six more development projects over the next 18 to 24 months.

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The REIT also routinely invests money to upgrade existing properties to drive higher rent. It has about 9,000 units across its portfolio that it could redevelop in the future by updating the kitchens and bathrooms. These high-return projects have historically driven high-single to low-double-digit rental increases.

MAA will also make acquisitions as compelling opportunities arise. For example, the REIT bought a 366-unit multifamily community in the lease-up phase for $81 million in the second quarter. That’s one of three recently completed communities it recently purchased from developers. The company has an elite balance sheet, giving it ample financial flexibility to continue acquiring properties as it finds attractive investments. It will also buy land for future developments and fund development projects it will purchase from builders.

The REIT aims to grow its core funds from operations (FFO) per share over the long term. That should enable it to continue increasing its dividend and deliver superior shareholder returns. That strategy has paid dividends for shareholders over the years, given the REIT’s rising payout and strong total returns (its total returns over the last five-, 10-, 15-, and 20-year periods have all exceeded the average of its multifamily peers).

Well-positioned to continue enriching investors

MAA has done a magnificent job growing value for its shareholders over the last 30 years. It has done that by focusing on owning apartments where people want to live, which has driven above-average rent growth and abundant opportunities to expand its portfolio. The REIT still has a lot of growth ahead, which suggests that it can continue enriching investors in the future. Add in its attractive dividend yield (nearly 4%) and cheaper valuation (17.6 times FFO multiple versus 19 times peer average), and MAA is a potentially very enriching investment opportunity these days.

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Matt DiLallo has positions in Mid-America Apartment Communities. The Motley Fool has positions in and recommends Mid-America Apartment Communities. The Motley Fool has a disclosure policy.

This Magnificent Dividend Stock Has Delivered a 3,880% Total Return Since 1994 (and Could Make You Richer in the Future) was originally published by The Motley Fool