Economic concerns have led the S&P 500 index 13% lower year to date. And since the stock market is actually a market of stocks, some stocks have done much better and some have fared much worse. 

Down 61% and 31% so far this year, respectively, the marijuana real estate investment trust (REIT) Innovative Industrial Properties (IIPR 0.20%) and warehouse REIT STAG Industrial (STAG -0.08%) fit into the latter category. There's no guarantee that these stocks won't fall further in the near term. But over the long run, they should have nowhere to go but up. Here's why. 

1. Innovative Industrial Properties

Because marijuana is still illegal at a federal level, sources of capital are limited for state-licensed cannabis operators. Innovative Industrial Properties has been able to capitalize on this opportunity with its first-mover advantage. This has allowed the REIT to build a real estate portfolio of 111 properties in 19 states valued at $2.4 billion as of June 30, making it the largest financer for cannabis companies. 

The cannabis REIT continued to leverage its leadership in 2021, investing $714 million to acquire more properties. This explains how IIP reported $204.6 million in revenue in 2021, which was a blistering 75% growth rate over 2020. And the company's adjusted funds from operations (AFFO) per share surged 32.9% higher year over year to $6.66 in 2021. AFFO is a metric that adds back significant noncash charges like amortization and depreciation to net income, as well as subtracting capital expenditures and routine maintenance amounts on properties.

Aside from the broader market downturn, IIP's stock has been hit hard this year due to the default of its fourth-largest tenant, Kings Garden, at 8% of stabilized rent revenue. The good news is that IIP should be able to find a replacement tenant, which could ultimately prove this to be just a minor blip on the radar. 

If anything, the short-term noise regarding Kings Garden could be a great buying opportunity for long-term investors. That's because this panic has pushed IIP's dividend yield up to a sky-high 7.3%. And with a 81.8% dividend payout ratio in the second quarter, the company's dividend is well covered.

IIP may have to deal with more tenant defaults in the future, but the current valuation seems to take that into consideration. The stock is trading at a trailing-twelve-month (TTM) price-to-AFFO-per-share ratio of just 12.5, which is a bargain for IIP's high growth potential.

A businessperson reviewing paperwork in their office.

Image source: Getty Images.

2. STAG Industrial

Possessing 551 industrial properties spread across 40 U.S. states, STAG Industrial is a major industrial REIT. Unsurprisingly, the company is also diversified. Amazon is its largest tenant at just 3.2% of annualized base rent (ABR). And its top 20 tenants comprise less than 20% of overall ABR. 

Yet the company is concentrated where it matters, which is in e-commerce. Approximately 40% of STAG Industrial's property portfolio handles e-commerce activities. This is encouraging because it's expected that total U.S. e-commerce sales will soar from $768 billion in 2021 to over $1.3 trillion by 2025. This should translate into strong underlying demand for its properties going forward, which is why STAG Industrial is projecting same-store sales growth of between 4% and 4.5% for 2022. For context, this would be the highest same-store sales growth rate in the company's history. 

And this growth doesn't look like it will be slowing down for many years, thanks to the industrial real estate addressable market in excess of $1 trillion. STAG Industrial is also unique in that it combines admirable growth prospects with a safe, market-crushing 4.4% dividend yield: The dividend payout ratio was manageable at just 67% through the first half of this year. 

STAG Industrial trades at a TTM price-to-core-FFO ratio of just 15.6, which makes it an appealing pick for investors seeking reliable monthly income