Obviously, nobody has a crystal ball that can predict how any stock will perform, especially in the long run. But there are some rock-solid real estate investment trusts, or REITs, that are the next best thing -- while their stock prices will fluctuate over time, they are set up to produce consistent growth and stable income for years to come.
With that in mind, here are three excellent REITs that should make their long-term investors tons of money.
Realty Income: The best dividend stock in the market?
I've written before that Realty Income (NYSE: O) is the best overall dividend stock in the market. Not only does it pay an attractive 4.5% dividend yield but the company has made more than 600 consecutive monthly dividend payments and has increased its payout 107 times since its 1994 NYSE listing.
If you aren't familiar with Realty Income, it owns a portfolio of more than 6,500 single-tenant properties, most of which are occupied by retail tenants. But this isn't just any retail REIT. Realty Income focuses on businesses that aren't recession-prone and don't have to worry much about e-commerce competitors -- think drugstores, convenience stores, and warehouse clubs, just to name a few examples. Tenants sign long-term leases with gradual rent increases built in, so all Realty Income has to do is put a tenant in place and enjoy years of predictable, growing income.
But don't think Realty Income is just an income stock. The stock has produced a 15.3% annualized total return since 1994, which means that an investor who bought $10,000 of Realty Income stock then would have seen their investment grow to more than $400,000 today. Realty Income is a stock that has made people rich.
American Tower: Communications infrastructure isn't going anywhere
One trend here to stay is wireless communications. In fact, the number of internet-connected devices is growing rapidly and is expected to continue to do so for the foreseeable future. But all the connected devices in the world are useless without the infrastructure necessary to support them.
That's why American Tower (NYSE: AMT) is an excellent REIT for investors looking to get rich gradually. The company is the largest REIT of any kind in the world and owns about 181,000 communications sites worldwide, leased to some of the largest communications providers in the industry. The business has fantastic economics (especially when several tenants are sharing a tower), and with the wide-scale rollout of 5G technology that will play out over the next decade or so, this leading REIT should be a profit machine for years.
Public Storage: Great economics and a dominant market lead
Self-storage is an excellent type of commercial real estate to own in any market environment. Sure, tenants are on month-to-month leases, but most people who use self-storage facilities need a place to keep their things. And the economics are fantastic -- self-storage properties are relatively cheap to build and maintain and require minimal staffing to operate. And that's especially true with the advantage of scale like Public Storage (NYSE: PSA) has.
In fact, the company has said previously that it can break even with just 30% occupancy. Public Storage ended the second quarter of 2020 with 94.6% occupancy, which is actually 50 basis points higher than the same time a year ago, so the COVID-19 pandemic hasn't had much of an effect.
When it comes to self-storage, Public Storage is the clear market leader and is several times larger than its closest competitor. And although it's a massive company, the self-storage market is highly fragmented, so there's still plenty of room for growth.
Since this is about REITs that can make investors rich, consider this: Over the past 30 years, Public Storage has delivered a staggering 12,000% total return for investors, meaning that a $10,000 investment would have grown to more than $1.2 million in three decades.