Investing in real estate stocks is generally considered a good way to balance a portfolio, since their value often moves independently of what's happening in the broader stock market. And when it comes to real estate investment trusts (REITs), their requirement to pay dividends can make them even more attractive to income investors.
But that doesn't mean you have to give up on growth. There are a number of REITs that have beaten the S&P 500 over the years, and currently, while beaten down, haven't fallen nearly as far as many of the go-go stocks that are at the bottom of their yo-yo cycle.
Here are four, including their 10-year total return, which combines price appreciation and dividend yield: Extra Space Storage (EXR 1.02%) at about 869.6%; SBA Communications (SBAC 0.35%) at about 561.2%; Terreno Realty (TRNO -2.12%) at about 545.2%; and Equinix (EQIX -0.66%) at about 483.7%. By comparison, the S&P 500 has provided a total return of about 296.3% over that same time period.
Image source: Getty Images.
This chart shows how much a $10,000 investment in each of these stocks, and in the S&P 500, made 10 years ago would be worth today.
EQIX Total Return Level data by YCharts
Here's a quick look at each of those REITs.
1. Extra Space Storage
Demand for self-storage space was growing anyway and became turbocharged by the pandemic. Extra Space Storage is the largest self-storage management company and the second-largest owner of such properties, with a portfolio of more than 2,700 properties.
Extra Space stock is yielding about 2.6% and trading at about $201 a share, giving it a market cap of about $28 billion. The company has raised its dividend for 13 straight years, including by 10.23% in the past three. A payout ratio of 71.94% based on 2022 earnings estimates could pave the way for continuing dividend increases.
2. SBA Communications
SBA Communications is the third-largest of the big three in mobile communications towers and related infrastructure, an industry that's growing along with the rollout of 5G networks across the globe. SBA now operates in 16 counties, primarily in the U.S., but also across South America and in the Philippines, South Africa, and Tanzania.
SBAC stock is yielding about 0.76% and trading at about $333 a share, giving it a market cap of roughly $36 billion. The company has raised its dividend twice in the past two years, and a payout ratio of only 23.89% based on 2022 earnings estimates could encourage this operation to up the dividend ante for shareholders.
3. Terreno Realty
Terreno Realty has a steadily growing portfolio of about 250 relatively small but ideally located warehouses in critical logistics nodes in six coastal markets: Los Angeles, northern New Jersey and New York City, San Francisco, Seattle, Miami, and Washington, D.C. Like its larger competitors, the company has seen demand for its space and its stock surge during the pandemic. The stock has since dipped, but warehouse space is at a premium, which bodes well for Terreno.
Terrno stock is yielding about 1.9% and trading at almost $72 a share, giving it a market cap of about $5.4 billion. The company has raised its dividend for nine straight years, including by 11.05% in the past three. A payout ratio of 62.96% based on 2022 earnings estimates should help keep that record growing.
4. Equinix
Equinix is the largest of the small coterie of data center REITs, operating more than 220 facilities on five continents for thousands of customers, including the largest cloud providers and others driving the global demand for digital interconnectivity.
The stock is yielding about 1.75% and trading at about $728 a share, giving it a market cap of more than $66 billion. The company has raised its dividend for six straight years, including by 7.97% in the past three. A modest payout ratio of 44.22% based on 2022 earnings estimates could pave the way for more increases.
This chart shows how far each of those REITs and the S&P 500 are down so far this year.
Like buying on the dip? No time like the present
Each of these stocks is still lagging the S&P 500 in getting back above water since the new year began. But they're all established performers with growing portfolios in sectors that show promise for growth for years to come. If you like buying on the dip, now might be a good time to do just that with each or all of these.
