Buying the right stocks at the right time can exponentially compound your returns over the long haul. Thanks to dividend raises and potential share price growth, real estate investment trusts -- or REITs, for short -- are among the best ways to get rich over time.
Cousins Properties(NYSE: CUZ), Invitation Homes(NYSE: INVH), and Digital Realty Trust(NYSE: DLR) are three stocks that appear to have major long-term growth opportunities backed by high-demand, essential industries. They are all trading at a significant discount right now, making them the perfect buys for those hoping to grow sizable returns.
Let's take a closer look at each and see why you may want to add these stocks to your portfolio today.
Everything is sunnier in the South
Office space has had a really tough run since the onset of the pandemic. Mandated work from home orders forced millions of companies to rethink the way they operate. Now, two years later, a growing number of businesses are adopting part-time and full-time remote positions, reducing their need for office space.
This has certainly put a strain on the office industry, leading to decades-high vacancy rates. But Cousins Properties has a major advantage that could make it worth a lot more over the next 10 years: Its portfolio locations.
Cousins Properties is the only office REIT to specialize exclusively in owning and leasing class A office space in the Sun Belt region of the United States. Cities where Cousins Properties operates -- like Austin, Texas, Raleigh, North Carolina, and Atlanta, Georgia -- are considered the best and fastest-growing markets for employment.
Office demand may be wavering now, but I personally don't think that will last forever. Businesses come and go, and certain companies and industries will require office space. Cousins Properties is literally in the ideal location to benefit from the office's comeback.
What's more, Cousins' latest earnings report from second quarter 2022, showed positive gains in funds from operations (FFO), net income, and leasing activity. Its portfolio is 90.2% leased and 87.5% occupied, which is much higher than the national average right now.
Current concern over offices' shaky performance right now has pushed Cousins' share price down 12% since 2020, making right now a great time to buy the stock at a discount while earning a dividend yield of more than 4%.
Redefining the rental business
Invitation Homes is the largest single-family rental REIT, with ownership and interest in over 75,000 single-family homes, primarily across the Sun Belt of the United States. The company has made an absolute killing as demand for single-family rental homes soared over the last few years. Its rents have grown in the double digits consistently for the past two years, with its blended lease rate -- which includes new and renewing leasings -- growing by 11.8% in Q2 2022.
Single-family housing is something that will never go out of style. People will always need a place to live, and some families will prefer the space and privacy of renting a home over an apartment. Long-term growth for the company is a major part of helping investors get richer through the stock. Thankfully, it has a plan for that. The REIT has partnered with a home developer which will deliver 7,500 new homes over the next five years. It also has the expertise and liquidity to stock up on homes if the housing market were to turn.
Invitation Homes' low payout ratio of 52% and seven dividend raises since 2017 make it an ideal candidate for more raises as it slows down on acquisitions and growth in the future. Share prices are down 15% from its 2022 high, but over the past three years, the company's share price is up nearly 40% and it's dividend yield has increased by over 17%. I believe there's still a lot more room to grow.
Technology is the future
Data centers have major money-making potential over the next 10 years. The digital innovation that's taken place over the last decade is incredible, and the next decade is likely to bring even more with it. These complex properties directly serve virtually every industry by helping store and aggregate data digitally.
Digital Realty Trust is one of two data center REITs investors can choose from and is one of the largest REITs by market capitalization. The REIT owns and operates just under 300 facilities serving 50 major markets across the globe. Its most recent earnings are showing lackluster growth due to several short-term headwinds like supply chain issues and increased supply of data centers globally, but its long-term potential remains huge.
It just completed the acquisition of Teraco, a South African data center operator, and is actively expanding and improving its presence globally. Not to mention, acquisitions in the data center space as of late make Digital Realty Trust a good buyout contender in the future.
Like its companions here, Digital Realty's stock has taken a bit of a beating recently. But that makes this a worthwhile time to buy shares of all three companies and hold for the next 10 years. While there are never any guarantees, given their respective businesses and growth opportunities for the coming decade, there's a good chance you'll be a lot richer because of it.
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Liz Brumer-Smith has positions in Cousins Properties, Digital Realty Trust, and Invitation Homes Inc. The Motley Fool has positions in and recommends Digital Realty Trust and Invitation Homes Inc. The Motley Fool has a disclosure policy.