Image Source: Getty Images

We all love high dividends. We especially love high dividends that are stable and grow regularly. And, if the stock has lots of upside potential, that's the trifecta. Real estate investment trusts, or REITs, can be a great way to get those qualities in your portfolio, but it's a mistake to just focus on the big names. Here are several reasons to expect  lesser-known REITs like Apple Hospitality Group (APLE -0.57%) and CareTrust REIT (CTRE -0.13%) could help you build massive wealth over the years.

Invest in healthcare real estate through this new REIT

I've written several times about healthcare real estate as an excellent long-term investment, generally while discussing one of the bigger players in that niche, such as Welltower, HCP, or Ventas. However, a smaller company such as CareTrust REIT could also be a smart way to go.

CareTrust is a relatively young REIT, spun off from healthcare facility operator The Ensign Group in 2014, that currently has 152 properties spread among 20 states. About three-fourths are skilled nursing facilities, but recent acquisitions have been more oriented toward senior housing properties, which are adding diversity to the portfolio.

Over the coming years, CareTrust should benefit from the same trends as the rest of its industry, among them a rapidly aging population and high healthcare cost inflation. In addition, because of its small size, CareTrust can focus on smaller, higher-yielding acquisition opportunities that aren't big enough to interest its larger competitors. In fact, CareTrust's Chairman and CEO Greg Stapley recently said that there are still ample opportunities for growth at superior returns for the company to take advantage of.

Source: CareTrust Investor Presentation

The major downside to CareTrust as opposed to its big brothers in the business is its lack of diversification. While the company continues to actively reduce its dependence on Ensign-operated properties, they still make up 56% of the total. This leaves the company highly dependent on the success of a single tenant. Because of this, and other factors, CareTrust's credit rating (B+/B1), while not bad, is not on the same level as some of the big players.

However, the valuation justifies the additional risk shareholders take. As of this writing, CareTrust trades for just 13.6 times its 2016 FFO guidance. Compared to Welltower or Ventas, with multiples are 16.4 and 17.0, respectively, this stock is pretty cheap. Finally, CareTrust's 4.6% dividend yield represents just 62% of the company's expected FFO for the year, leaving plenty of room for increases.

Americans love to travel

Apple Hospitality REIT (APLE -0.57%) invests in hotel properties under various Hilton and Marriott brand names, with particularly high concentrations of Courtyard by Marriott, Residence Inn, Springhill Suites, Homewood Suites, Hilton Garden Inn, and Hampton hotels. After its recent merger with non-listed public REIT Apple REIT Ten, the company owns 234 hotels with just over 30,000 guest rooms.

The basic strategy is to build a large portfolio of some of the newest hotels with well-known brand names. In fact, the average effective age (time since construction or most recent renovation) of Apple Hospitality's properties is just four years. This has led to strong margins and relatively low volatility -- the company's profit margins are among the highest of its peers.

Source: Apple Hospitality REIT presentation

One reason I particularly like the company's business model is that while all of the hotels are operated by third-party managers, most of them have their management fees directly tied to the performance of the hotels, or will be transitioning to such an arrangement shortly. This incentivized fee structure should help maximize the potential of Apple Hospitality's properties. Additionally, CBRE Hotels Americas Research projects that hotel demand and revenue growth will increase through at least 2018, so there should be plenty of opportunities for strong performance going forward.

While Apple Hospitality REIT's history is limited -- like CareTrust, the company has only been around in its present form since 2014 -- things are looking good so far. During the second quarter of 2016, the company's comparable revenue grew by more than 5% year-over-year, and EBITDA grew by 11.6% on improving margins. The company's $1.20 annual dividend (6.6% yield) is paid in monthly installments, and the stock trades for an extremely low valuation of just 10.6 times TTM FFO.

The bottom line

Investors should keep in mind that smaller REITs like these trade for much cheaper valuations than their larger peers for a reason: They come with more risk. Smaller REITs are more reliant on the performance of individual properties, geographical areas, and tenants, and tend to have somewhat higher debt levels.

However, their reward potential can be much greater. Both of these companies pay generous dividends that don't utilize most of the funds available for distribution, and their revenues are growing at impressive rates. To sum it up, these two little-known REITs could be great additions to the portfolio of any dividend-seeking investor.