15 REITs That Are Outperforming the S&P 500

In addition to competitive dividend payments and diversification across real estate industries, real estate investment trusts (REITs) have historically outperformed the S&P 500 over the long term, making them an attractive buy for investors.

Today's market volatility -- putting the S&P 500 down around 10% at the time of this writing -- puts REITs at a notable advantage. Here's a closer look at 15 REITs that continue to outperform the S&P 500.

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Public Storage (NYSE:PSA) is the largest self-storage REIT in the world, having an interest in over 2,800 properties across the country.

The company went on a buying spree in 2021, spending $5.1 billion to expand its portfolio. Not only is the company outperforming the S&P 500 right now, providing a roughly 7% return, but it's also outperformed the S&P 500 for over 25 years.

Its business practice has a proven track record, and the company has an extremely well-balanced balance sheet, making it an extremely safe investment to hedge a portfolio today.

ALSO READ: Investing in Self-Storage REITs

Specializing in the ownership and leasing of 382 open-air shopping centers, Brixmor Property Group (NYSE:BRX) is quickly making a name for itself among retail REITs.

Brixmor has cleaned up its act after making management changes in 2016 and notably improved its balance sheet. Focused primarily on grocery-anchored retail neighborhood centers within close proximity to residential areas, it has a roster of high-quality institutional-grade tenants with solid credit ratings.

The company has a redevelopment program that helps add value to its existing portfolio while expanding its presence through strategic acquisitions. Its current return is just over 4%, and Brixmor has managed to outperform the S&P 500 for the past three years now.

Boston Properties (NYSE:BXP) is a premier office REIT specializing in the ownership and leasing of 201 high-end Class A office spaces across six major metro markets: Boston, New York City, San Francisco, Los Angeles, and Washington, D.C.

Initial pandemic challenges, including office closures and people fleeing the major metro markets Boston Properties operates in, resulted in a dismal few years for the company's performance.

However, leasing activity is making positive improvements quarter over quarter, and its break into life sciences -- a strong industry within the office sector -- is a promising switch to help its portfolio recover further.

While there are certainly still challenging times ahead for Boston Properties, it seems it is headed in the right direction, providing a roughly 10% return year to date, over double that of the S&P 500.

ALSO READ: Real Estate Investing: Is The Office Sector Getting Back to Normal?

Iron Mountain (NYSE:IRM) is a diversified REIT specializing in the physical storage, organization, and distribution of data for major companies like banks and attorneys' or doctors' offices, in addition to managing and storing digital data through its growing base of data centers.

Leasing has been strong for Iron Mountain on both fronts, signing ​​49 megawatts of LT leases in 2021 and growing revenues by 32% in 2021 compared to the previous year. Right now, its return is nearing 8%.

W.P. Carey (NYSE:WPC) is a diversified REIT that owns and leases a variety of real estate properties, including industrial and warehouse, retail, and office spaces. Diversification across a wide range of commercial real estate is attractive right now as certain sectors recover from pandemic-related challenges.

The company has steadily grown its portfolio size and performance year over year while raising its dividend every year since its initial public offering (IPO) in 1998. It currently nets a roughly 5% dividend return for investors and has provided a total return of 4.5% year to date.

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Rexford Industrial REIT (NYSE:REXR) is a Southern California industrial REIT that owns and leases 259 industrial properties and last-mile distribution centers.

Los Angeles is leading the way for industrial demand, having an insanely low vacancy rate of 0.52% that puts Rexford in an incredibly strong position. Funds from operations (FFO), an important metric to illustrate a REIT's profitability, grew 44% in 2021, while net operating income grew 37%.

Its return is sitting just under 1% year to date, which isn't stellar, but it still far exceeds the recent performance of the S&P 500 while providing great exposure to the hottest market for industrial real estate.

ALSO READ: Investing in Industrial REITs

The hotel industry was crushed early on in the pandemic. Thankfully, demand for recreational and business travel is returning, giving Ryman Hospitality Properties (NYSE:RHP) -- a hotel and lodging REIT that owns convention and entertainment resorts -- a much-needed boost in performance.

While still operating at a net loss, its performance has improved notably. Fourth-quarter 2021 revenues were up 30% from the previous quarter, while all metrics, including FFO and earnings before taxes, interest, depreciation, and amortization (EBITDA), were up as much as five times from 2020 levels.

Ryman's comeback has regained investor attention, particularly because it offers a 5.5% total return year to date.

Rayonier (NYSE:RYN) is a timberland REIT that grows, leases, and develops land for the production of timber products like lumber or paper.

Timber demand has soared as initial pandemic closures resulted in a shortened supply. Lumber prices are getting closer to pre-pandemic levels, but Rayonier is still benefiting from lingering effects.

Revenues for the full year of 2021 were 262% higher than in 2020. At over 10%, its return is among some of the highest for REITs right now.

ALSO READ: 5 Best Lumber Stocks to Buy in 2022

NexPoint Residential (NYSE:NXRT) is a smaller residential REIT specializing in the ownership of 39 Class B multifamily properties in the Sun Belt. The Sun Belt region, which encompasses popular markets for real estate demand and job growth across Florida, Texas, Arizona, Nevada, and Southern California, is booming.

While NexPoint is operating at a net loss, it's trending in a positive direction. FFO was up 39% in Q1 2022, and net operating income (NOI) grew by 23%.

It still has a ways to go when it comes to improving its balance sheet, but given that rental housing is a super-hot industry right now and its portfolio is in some of the best markets, its 7.5% return is certainly appealing for investors.

Realty Income (NYSE:O) is one of the oldest and largest REITs, with 11,000 properties. It's primarily a retail REIT, but it also owns residential, office, and even casino spaces in its portfolio, with an incredibly strong track record for its performance and dividend returns.

Realty Income pays monthly dividends and is a Dividend Aristocrat, having 53 years of consistent dividend increases. Today, Realty Incomes' total return is a meager 2.7%, but its historical performance brings the wow effect. The company has managed to outperform the S&P 500 over the past 27 years.

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Farmland serves an essential role in our economy, making Gladstone Land Corp (NYSE:LAND) an attractive REIT to invest in. Specializing in the ownership and leasing of 164 farms that are used to grow nuts, fruits, and vegetables, Gladstone provides the much-needed produce our growing population needs to live.

Targeted more for its growth opportunities than dividends, its current dividend return is 1.49%, which is low by most REIT standards. However, at 16%, its total return year to date is the highest of the REITs on the list, which more than makes up for its lackluster payouts.

ALSO READ: Why Buying Vacant Land Can Be an Incredible Real Estate Investment

Welltower Inc. (NYSE:WELL) is one of the largest healthcare REITs, specializing in senior housing units, of which it owns and leases 125,000 to date.

The past two years were rough for senior housing operators as they battled high COVID-19 case numbers and decreased demand for elderly housing. But as case numbers decline, it appears demand is back. Occupancy has not just returned to normal but outpaced pre-pandemic levels, with plenty of room to grow as the baby boomers continue to age.

Welltower is in the process of converting to an umbrella partnership real estate investment trust (UPREIT) structure, which should help with future acquisitions without impacting shareholder interest. Its total return year to date is over 12%, an impressive return that far outpaces the S&P 500 today.

ALSO READ: 10 Reasons to Buy Welltower

Kimco Realty (NYCE:KIM) is a retail REIT with ownership or interest in 541 retail properties, including open-air centers and supercenters.

Despite pandemic woes that plagued much of the retail industry at the onset of the pandemic, Kimco managed to withstand and overcome the hurdles, thanks to the majority of its annualized base rent (ABR) coming from essential retail operators like grocery stores, which weren't impacted by the pandemic. Its total return year-to-date is 4.76%.

Prologis (NYSE:PLD) is the largest REIT by market capitalization and an absolute giant among industrial REITs, having ownership and interest in 4,735 industrial properties across 19 countries.

A limited supply of industrial space and increased demand, thanks to supply chain disruptions and increased costs for shipping goods, have resulted in record-high industrial rent growth and super low vacancy rates.

Being the biggest in the industry means this record demand directly impacts the company in a big way. Total return year to date is 0.13%, although its return for the past 25 years is over twice that of the S&P 500.

ALSO READ: How REITs Will Help Slow Supply Chain Bottlenecks

Independence Realty Trust (NYSE:IRT) is a smaller, up-and-coming residential REIT with ownership and interest in 119 apartment communities in suburban markets across the Sun Belt.

It recently completed a merger acquisition of Steadfast Apartments, which more than doubled its portfolio of properties and gave it notably more exposure to the booming Sun Belt region. While it still has a long way to go in terms of improving its balance sheet as it expands its portfolio, its performance is strong. Its total return year to date is just over 8%.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

These 15 REITs can offer your portfolio a reprieve during market turbulence as they continue to outpace the S&P 500. While not immune to their own market sensitivities, the companies have a lot of room to grow.

And due to the general nature of REITs being driven by the real estate market more than the stock market, they offer diversification and a bit of security in challenging times.

Liz Brumer-Smith owns Independence Realty Trust, Inc. and Prologis. The Motley Fool owns and recommends Gladstone Land, Independence Realty Trust, Inc., Iron Mountain, Prologis, and Rexford Industrial Realty. The Motley Fool recommends Ryman Hospitality Properties. The Motley Fool has a disclosure policy.