Since real estate investment trusts (REITs) are required to pay 90% or more of taxable income in the form of dividends, investors can lock in yields that are often 2 to 5 times more than the S&P 500 average. Paying higher yields often means REITs grow at a slower pace than more-traditional stocks.

But many REITs still have explosive growth potential over the next 10 to 20 years. And considering that many are down 20% or more this year from rising interest rates and the general bear market, buying at today's beaten-up pricing works to investors' advantage for long-term growth.

Three stocks that Motley Fool contributors believe are poised for a bull run in the new year are Blackstone (BX 1.62%), Hannon Armstrong Sustainable Infrastructure Capital (HASI 1.76%), and American Tower (AMT 1.24%).

Here's a closer look at each company and why these Motley Fool contributors think they could explode in 2023.

Weak investor sentiment makes this stock a screaming buy

Liz Brumer-Smith (Blackstone): Blackstone is the largest alternative-asset management company in the world, overseeing more than $950 billion in assets for wealthy investors and companies. The company earns a fee for its management services, including incentive bonuses for reaching targets within its private funds and Blackstone Real Estate Investment Trust (BREIT) across a wide range of investment industries. 

Its revenue has climbed steadily over the last decade as more and more investors flock to the alternative-assets sector in a challenging economy. According to its third-quarter report, its fee-related earnings grew 51% year over year, while its assets under management (AUM) jumped by 30%.

The general bear market has been hard on the stock. But the recent news about an increase in redemption requests by investors in BREIT, on top of its potential delayed start-up of an equity fund, has pushed share prices down to new 52-week lows. The company is still performing admirably, however, and should continue to perform admirably in 2023 and beyond.

On top of being flush with cash, the company is well versed in opportunistic investing. If the market were to worsen in 2023 or shortly thereafter, Blackstone would have the knowledge and capital available to invest in new opportunities at rock-bottom pricing. The key is patience.

The stock has provided nearly double the annualized return of the S&P 500 over the past 10 years, and I believe it could continue on its path to rapid growth over the next 10 years. Plus, investors can rest easy knowing it has plenty of coverage to maintain its ultra-alluring dividend yield of 6.5%.

Ready to support an explosion in sustainable infrastructure in 2023

Kristi Waterworth (Hannon Armstrong Sustainable Infrastructure Capital): It's hard to guess about the future, especially when the world seems to be throwing up a lot of unprecedented stuff, mostly all at once. But if I had to choose a singular dividend stock that I would expect to have a bull run in 2023, I'd have to go with Hannon Armstrong.

This unusual REIT has been investing in solar and other sustainable infrastructure for almost a decade,  growing both its portfolio and its dividends along the way. The largest portion of its business is what's known as "behind the meter," which includes residential and community solar projects. Hannon Armstrong provides the capital for these projects, as well as the real estate, when applicable. The sponsor of the sustainable project then pays back the investment capital with interest, as well as agreeing to a triple net lease when real estate is involved. 

Right now, the stock is down significantly, at $31.64 as of Dec. 21, from a one-year high of $52.12, a nearly 40% drop in market value. This is despite 23% growth in total revenue between the third quarter of 2021 and the third quarter of 2022, with only a 5% increase in expenses.

Investors responded dramatically after the second-quarter 2022 report, when the company said that it was being forced to write down two leases for wind projects that were worth about $8 million. But this is exceptionally rare in the history of this company, and while investors might not have loved it, it's not a pattern with Hannon Armstrong. In fact, the company itself sees nothing but blue skies ahead, forecasting a 55% gain in distributable earnings per share from a 2020 baseline of $1.55 to $2.40 in 2024.

With increasing interest in solar and wind farms, as well as smaller municipal sustainability projects across the nation, there's no doubt that this is an industry poised to explode, and its leaders will absolutely grow with that rising tide. Hannon Armstrong has been there since nearly the beginning, and I have no doubt it will be a go-to for even more of these projects as they continue to ramp up in 2023.

Building out the infrastructure for a rally

Marc Rapport (American Tower): The S&P 500 is down about 20% so far this year, but American Tower is off even more (about 27%) even though this titan of a REIT has played a major role in the rollout of mobile communications that just continues to gain steam.

The yield from AMT shares is not particularly impressive: only about 2.7% at a current share price of about $262. But this is a growth stock in REIT clothing, too. American Tower's gain in share price and total return over the past 10 years is just above that of the S&P 500. And since its initial public offering in 1998, this REIT has nearly tripled that benchmark in total return.


American Tower has a portfolio of 223,000 telecommunications sites around the world, including more than 43,000 towers and distributed antenna systems in the United States, as well as a growing collection of small cell nodes used to power wireless connections inside stadiums and other large buildings and venues.

The company also has closed on its acquisition of CoreSite Realty, an international data center REIT, in a $10 billion deal announced last November. And it is now complementing that with an investment in edge computing that includes the construction of the first half-dozen or so small network and cloud centers in several major U.S. markets.


All these efforts are aimed at supporting the rapid expansion of 5G networks by creating and leasing tower, antenna, and data-center space to thousands of customers -- including all the major mobile carriers -- that simply must have this access.

That's a recipe for go-go growth when the market makes its inevitable upturn, which could well happen once recession fears fade and interest rate increases stop, possibly as early as next year.