These 4 REITs Have Beaten the S&P 500 for Years and Should Keep on Doing Just That

The stock market has been weighed down by a plethora of bad news and challenges as of late, including soaring inflation and interest rates, supply chain uncertainty amid a lingering pandemic, and the war in Ukraine to name a few. Shelters from this financial storm seem few and far between as even the most reliable publicly traded equities have sustained serious downturns.

At least for now.

The long arc of history, at least as the U.S. stock markets are concerned, shows that what goes down will eventually come up, and now’s the time to look for future winners.

Image source: Getty Images.

A good place to start that search might be with these four real estate investment trusts (REITs) that have impressive records of beating the S&P 500 in total return over the years. They also have current portfolios that should keep pumping out dividend income during this downturn and are in industries that should help lead the way when money starts returning to the market in volume enough to once again push up prices.

They are Equinix (EQIX 4.75%) in data centers, logistics landlord First Industrial Realty Trust (FR 2.65%), mobile infrastructure specialist Crown Castle International (CCI 2.58%), and self-storage giant Extra Space Storage (EXR 2.43%).

Conventional investing wisdom holds that just buying an S&P 500 index fund and sticking to it will build more wealth than what the average investor can pick and choose on their own. But these aren’t just average performers. Over the past 10 years, the S&P 500 has returned 258.6%. Extra Space Storage has nearly tripled that and the other three have easily outpaced that major market index as well.

FR Total Return Level data by YCharts

Four REITs outstanding in their respective fields

Equinix is one of the few data center owners that hasn’t been acquired, and it’s the largest REIT of its kind, with more than 220 facilities in more than 60 markets on five continents. It’s also raised its dividend for seven straight years and is now yielding about 1.98%.

Extra Space Storage stashes the cash from a growing portfolio of 2,130 stores that makes it the second-largest owner/operator and largest self-storage third-party management company in the country. Its stock is now yielding about 3.54% after 14 straight years of dividend increases, including a 10.23% boost over the past three years.

Crown Castle is the second-largest owner of mobile towers in the United States and is making a strong move into small-node networks and the fiber cable infrastructure needed to capitalize on the growth of 5G networks. Crown Castle has lifted its payout by 8.5% in the past three years, good for a current yield of about 3.35%.

First Industrial has a portfolio of 434 buildings in key distribution hubs across the country, serving nearly 1,000 customers in the red-hot warehouse space, and has raised its dividend for nine straight years, including by 7.47% in the past three, and is now yielding about 2.27%.

Beaten-down makes for beckoning buys

All four of these stocks are beaten down right now even more than the S&P 500, which is down about 17% so far in 2022. Crown Castle’s share price is down about 17% year to date, followed by First Industrial at 21%, Extra Space Storage at 22%, and Equinix at 25% at the time of this writing.

To me, these are buying opportunities. All four of these REITs have many of those characteristics of a company whose stock is a buy and hold, including large and growing addressable markets and moats around their businesses.

They also each have the portfolios and strategies in place that lend confidence to the notion that they’ll resume their market-beating ways once the overall market begins a rally of its own. That tide, of course, will lift most boats, and these companies are likely to once more rise above the crowd.