Cryptocurrencies scored some fantastic gains in the past year. Over 20% of the top 300 cryptos by market cap surged more than 1,000% in 2021. Gains like that turned $100 into more than $1,100.
However, in exchange for those big gains, crypto investors pay a high price in volatility. Even major cryptocurrencies like Bitcoin have seen their share of plunges. For example, Bitcoin crashed 51% earlier this year, one of several 50%-plus drawdowns over the years.
That type of volatility isn't for everyone. If you'd like to invest in something safer, you might want to consider these three real estate investment trusts (REITs). While they won't gain 1,000% in a single year, they should produce steady returns with less volatility, making them much safer than investing in crypto.
Realty Income (O 0.38%) is a proven winner. Since its public listing in 1994, the REIT has delivered 15.4% compound average annual total returns, significantly outpacing the S&P 500's 8.4% total return during that time frame. That's more than 4,800% overall, and it would have turned a $10,000 investment into nearly $490,000. What's more, Realty Income has delivered those market-crushing returns with half the volatility of the S&P 500.
One big driver of those returns is Realty Income's monthly dividend. That income stream makes it stand out from cryptocurrency, which doesn't generate any income. Realty Income has steadily increased its dividend payment, giving its investors a raise for 97 straight quarters. A big driver has been its ability to steadily acquire new cash-flowing properties.
Meanwhile, Realty Income is among the best when it comes to safety. It has one of the strongest balance sheets in the REIT sector and a diversified real estate portfolio leased to high-quality tenants. All this means the company should be able to continue growing its portfolio and generate strong total returns for investors in the coming years.
Camden Property Trust
Camden Property Trust (CPT 0.95%) has also enriched its investors over the years. The apartment REIT has delivered a 13.4% total annualized return since its IPO (more than 3,500% overall), pulverizing the S&P 500's 7.4% total annual return.
Driving Camden's strong returns is its stable growth. The REIT has benefited from steadily rising rental rates and a growing portfolio of apartment communities. It has invested billions of dollars in building and buying new apartments over the years. The company's development projects have been an enormous value creator. It spent $2.2 billion over the last decade to build 34 communities, which are now worth an estimated $4.1 billion.
Camden has plenty of financial flexibility to continue growing because it has one of the best balance sheets among apartment REITs. Combined with its focus on the solid apartment sector, Camden's strong financial profile makes it one of the safest REITs overall.
Prologis (PLD 2.44%) is one of the largest global industrial REITs. The company's focus on modern logistics facilities has paid big dividends. Prologis has delivered a 13.1% total annualized return since its IPO (roughly 1,840% overall), crushing the 8.5% total annualized return of the S&P 500.
Prologis' global scale and diversified business model makes it one of the safest industrial REITs. It also boasts one of the strongest balance sheets in the sector. That gives it the financial flexibility to continue expanding. Like Camden, it has created enormous value for investors through development, with an estimated $4.1 billion in value creation coming from its development projects over the last decade. With a massive land bank and a top-tier balance sheet, Prologis should be able to continue growing value for its investors in the coming years.
REITs: Safer bets than crypto
There's no doubt that cryptocurrencies offer the opportunity to score big-time gains. However, they're also excruciatingly volatile.
REITs are a great alternative for investors who don't want to stomach the ups and downs of cryptocurrencies. Top-quality REITs like Realty Income, Camden Property Trust, and Prologis have a history of slowly enriching their investors with much less volatility. All three have the financial strength to continue growing, making them much safer investments than crypto.