There are some excellent investment opportunities in stocks that most investors know, but sometimes it can pay off nicely to look beyond the household names. There are some great companies -- especially in the real estate sector – that many investors haven't heard of that have excellent risk-reward dynamics and the capability to produce market-beating returns for years to come.

With that in mind, here are two under-the-radar stocks that patient long-term investors may want to take a closer look at in 2023.

Great dividends and upside potential

Easterly Government Properties (DEA) is a real estate investment trust, or REIT, that invests in several different types of commercial properties. However, all of them have one thing in common -- their tenant is the United States government (specifically, its various agencies). This gives Easterly a near 100% occupancy rate, and a steady and reliably growing income stream that many REITs would love to have.

It may seem odd that such a steady and predictable business would be more than 30% below its highs, but that's exactly what has happened. And there's a good explanation. Because it is such a predictable business and is largely owned by income-seeking investors, it trades more like a bond than a stock. In other words, Easterly Government Properties is highly sensitive to rising interest rates. As rates rise, the yields investors expect from income instruments rise as well, which puts pressure on the stock prices. But now, investors can buy shares at a massive discount while inflation and interest rates remain high and receive a 6.8% dividend yield while they wait for things to normalize.

A unique real estate company with tons of optionality

It's tough to describe what Howard Hughes Corporation (HHH 0.23%) does, but a good term would be "city builder."

Howard Hughes Corporation develops master planned communities, but at a massive scale. If you've ever been to the Woodlands near Houston or Summerlin in Las Vegas, those are Howard Hughes communities, and are the size of small cities. In fact, the company's name is derived from billionaire Howard Hughes' original company, which started the Summerlin community.

The general idea is that the company acquires a large parcel of land, like the 37,000 acres it recently bought near Phoenix. It then sells a small portion to homebuilders, who develop residential neighborhoods. Then, it builds commercial properties (like an office building or hotel) near these new neighborhoods, which makes the surrounding land more valuable to homebuilders, and it sells a little more. This cycle of value creation can repeat for decades.

Obviously, this business model isn't ideal when the real estate market comes to a virtual halt like it has recently, and that's a big reason why the company is trading for well below its highs. However, the business is still performing quite well. The business remains highly profitable, master-planned community earnings (land sales) increased 39% year-over-year in the third quarter, and despite a difficult environment for several types of commercial properties, Howard Hughes Corporation's operating assets grew NOI slightly.

However, there's a ton of long-term value creation potential. As an example, in the 37,000-acre Phoenix-area community, Howard Hughes Corporation anticipates creating a total of 100,000 homesites and developing 55 million square feet of commercial space. And as the land sales are used to fund the commercial development, the model is very self-sustaining.

Buy for the long term

To be perfectly clear, I love both of these as long-term investments. I have absolutely no idea what these stocks will do over the next few weeks or months, and if the economic uncertainty persists, they could be very volatile. Having said that, I'm confident that investors who buy at these levels will do very well over the coming years.