There are lots of ways to build up a $1 million retirement nest egg. For example, if you invest $300 a month into an investment earning 10% annually (around the average stock market return), you'd become a millionaire in 36 years. Increase your investment rate or the rate of return, and you can become a millionaire even faster.

Many stocks have delivered market-beating total returns over the years. Three companies that have produced high returns with lower-risk business models are Stag Industrial (STAG -0.17%), Equity Lifestyle Properties (ELS -0.36%), and Extra Space Storage (EXR -0.27%). The real estate investment trusts (REITs) have delivered average annualized total returns of more than 15% since their public market debuts. They're in an excellent position to continue producing strong total returns in the future, and they could help turn a $300-a-month investment into a $1 million retirement nest egg for investors who steadily buy and hold shares for the next few decades.

Slow and steady wins the race

Stag Industrial has delivered a 15.8% annualized total return since its public market listing in 2022. One factor driving the industrial REIT's strong returns is its dividend. It pays a high-yielding (currently 3.8%) monthly dividend that it has increased every single year.

The REIT has steadily grown its payout by investing in high-quality industrial real estate that it leases to tenants under long-term net leases. Those agreements supply it with steadily rising rental income (its contracts have escalation clauses that increase rents by over 2.6% each year). Stag pays out less than 75% of its stable income in dividends, enabling it to retain some cash to fund new investments.

Stag Industrial uses its retained cash and strong balance sheet to acquire additional income-producing industrial properties. The company often targets those with value-add upside potential. The REIT will buy properties it can improve through leasing or expansion projects. It will also opportunistically invest in development projects. Those investments can earn higher returns, enabling it to grow its income faster. With growing post-dividend free cash flow and a strong balance sheet, Stag Industrial should be able to continue expanding its portfolio. That should enable it to keep pushing its dividend higher, helping fuel strong total returns.

Going off the beaten path for outsized returns

Equity Lifestyle Properties has delivered a 15% annualized total return since coming public in 1993. A big driver has been its focus on investing in properties off the beaten path, like manufactured home communities, RV parks, and marinas.

The REIT has steadily expanded its portfolio by acquiring new properties. It has grown from 41 properties with over 12,300 sites at its IPO to around 450 properties with over 171,200 sites. This expansion has increased the company's rental income, enabling it to steadily boost its dividends. Since 2006, Equity Lifestyle Properties has grown its normalized funds from operations (FFO) per share at a 9% compound annual rate while increasing its dividend by a 21% compound annual rate.

Equity Lifestyle is in an excellent position to continue growing at an above-average rate. Demand for space in its properties is strong, while new supply remains limited, which is driving up rental rates. Meanwhile, the company has a strong balance sheet, giving it the capacity to invest in expanding existing locations and acquiring new ones. Those drivers should continue pushing its FFO and dividends higher in the coming years.

Growing into a behemoth

Extra Space Storage has delivered an 18.7% average annualized total return since its public market listing in 2004. The self-storage REIT has grown rapidly by acquiring additional properties, raising rates, and establishing new growth platforms (third-party property management and bridge loans). It's now the largest self-storage REIT, with 13.7% of the U.S. market, and the industry leader in third-party management.

The company's management platform has been a major revenue driver. It doesn't take much capital investment to manage properties for other owners, enabling it to earn high-margin management and insurance revenue. That has helped the REIT grow its core FFO and dividend at industry-leading rates. Since 2011, its core FFO has surged 695%, while its dividend has rocketed 548% over the last 10 years.

Extra Space recently closed its merger with fellow self-storage REIT Life Storage, creating an industry behemoth. The deal will boost its income and enhance its growth profile. Meanwhile, it has a strong balance sheet, giving it the capacity to continue expanding its portfolio.

Wealth-creating REITs

Stag Industrial, Equity Lifestyle Properties, and Extra Space Storge have delivered market-beating total returns over the years. These proven wealth creators remain well-positioned to continue producing strong returns in the future as their rental income and dividends keep rising. That makes them great stocks to buy with an eye toward building a $1 million retirement portfolio.