Real estate investment trusts, or REITs, are known for their above-average dividends, but many investors overlook their potential for great total returns over the long run. But with smart capital allocation and the appreciation of real estate over time, you might be surprised at the return potential of REITs and their relatively low volatility.

Here are two REITs which both have 4.6% dividend yields at the current stock prices and have handily beaten the total returns of the S&P 500 and could continue to do so for many years to come.

Scale advantages and tons of room to grow

Vici Properties (VICI -0.53%) is a REIT that specializes in gaming properties. It was formed in 2017 when Caesars Entertainment (NASDAQ: CZR) spun off some of its real estate assets and has grown impressively in the years since then. Today, Vici owns 49 gaming properties, including iconic assets such as Caesars Palace, MGM Grand, and the Venetian in Las Vegas. It is the largest real estate owner on the Las Vegas Strip and the largest experiential REIT in the entire stock market.

Now, the casino business itself is quite cyclical, but Vici is designed to produce steady returns in any economic climate. Its properties are all triple net leased to tenants. The leases are an average of 42 years in length, with gradual rent increases built in. The income is also inflation-protected, as 96% of its leases have some form of rent escalators linked to the Consumer Price Index (CPI)

Vici has a stellar balance sheet that gives it excellent access to capital, and this has allowed it to not only expand its portfolio rapidly in less than six years of existence, but to do so in ways that create shareholder value. In fact, since its 2017 initial public offering (IPO), Vici has delivered more than double the total return of the S&P 500.

Vici still has lots of room to grow. Not only is the gaming industry expanding across the United States, but the company aims to gradually add non-gaming experiential assets to its portfolio as opportunities arise. The company even owns some undeveloped land around the Las Vegas Strip it could put to use. And it has done an excellent job of finding ways to invest in the rising rate environment, such as providing financing to expand Great Wolf Resorts' portfolio.

My favorite overall dividend stock

I've called Realty Income (O 0.52%) perhaps the best overall dividend stock in the market, and I truly believe it belongs in that conversation. Realty Income was the first real estate investment trust I ever bought, and I've added to my position many times over the years.

If you aren't familiar, Realty Income has been around since the late 1960s. It went public in 1994 and has built a portfolio of more than 11,700 properties. About 80% of its properties are retail in nature, with holdings in industrial, agricultural, and gaming properties as well. But don't be afraid of the retail exposure; nearly all of Realty Income's tenants are recession-resistant and not vulnerable to e-commerce headwinds, or both.

Plus, the tenants all sign long-term triple net leases, so all Realty Income has to do is acquire a property with a top-quality tenant in place and enjoy years of steadily growing, predictable income.

One look at the numbers tells the story. Realty Income has made 632 consecutive monthly dividend payments (over nearly 53 years) and has increased its payout for the past 101 quarters in a row. And it's not just a dividend play. Thanks to smart capital allocation, Realty Income has delivered annualized total returns of 14.4% since its 1994 NYSE listing. For context, that means a $10,000 investment at that point would have grown to nearly $500,000 less than 30 years later. 

Both have market-beating potential for decades to come

Obviously, past stock performance can't guarantee future investment results, even in cases like Realty Income's long and impressive track record. However, these stocks generate excellent income and could continue to produce market-beating total returns for long-term investors. Both have scale advantages, excellent balance sheets, and massive growth opportunities ahead of them. The best part is they are designed for steady growth and can deliver strong returns while still letting you sleep at night.