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Since I'm an investor in my early 40s, many people are surprised to see a relatively high concentration of real estate investment trusts, or REITs, in my portfolio. After all, many think of REITs as boring income investments.

However, REITs are not only excellent income stocks, but they can have serious upside potential over the long run. Through smart capital allocation, many REITs have done an excellent job of creating shareholder value over time, and have produced market-beating long-term total returns.

This is why I own REITs when I'm still more than 20 years from retirement. My goal is to use these stocks to compound in my portfolio over the next couple of decades, reinvesting all of my dividends along the way, so they can produce excellent income streams after I eventually retire.

With that in mind, here are two REITs in particular that could be smart additions to a long-term portfolio right now.

This "casino REIT" has tremendous growth potential

Vici Properties (NYSE: VICI) is best known as a gaming REIT, and for good reason. It originated as a spin-off of some of Caesars Entertainment's (NASDAQ: CZR) real estate assets, and has since acquired its largest competitor and several other impressive gaming assets. It owns several of the most iconic Las Vegas Strip properties and many of the best regional gaming real estate around the U.S.

However, this could be just a starting point, as Vici has recently started to diversify into other types of entertainment and recreational properties. It acquired a portfolio of Bowlero entertainment centers, and recently agreed to provide the construction funding for a new Margaritaville Resort.

The key points about these types of properties (especially casinos) are that tenants tend to sign long leases with annual rent increases built in, and vacancies are quite rare. Vici currently has a 5.8% dividend yield that is well covered by its earnings, and it already has a strong history of raising its dividend over time.

An income machine with a proven track record

EPR Properties (NYSE: EPR) is another REIT that specializes in experiential properties. It owns a portfolio of theaters, waterparks, ski resorts, entertainment properties, and more. While pandemic-era headwinds caused turbulence in the theater portfolio (including the bankruptcy of its second-largest tenant), the situation has been resolved favorably for EPR, and the business is firing on all cylinders.

Like Vici, EPR's tenants generally sign long-term lease agreements with built-in rent growth. It aims to reduce its theater exposure over time and grow the other areas of its portfolio, and it already has relationships with excellent tenants, including TopGolf and Vail Resorts (NYSE: MTN), just to name a couple.

In fact, EPR recently increased its dividend and has an attractive 8.1% yield at the current price. And not only is it generating enough cash flow to cover the dividend, but EPR actually has one of the lower payout ratios in the REIT industry.

While the movie theater headwinds and rising-rate environment have weighed on the stock, the long-term results show what a great business this is. Since going public in 1997, EPR Properties has generated a 1,330% total return for investors, compared with a 770% total return from the S&P 500 during the same period.

How much retirement income could these generate?

Of course, there's no way to accurately predict the long-term performance of any publicly traded companies, but we can certainly use their past performance as an indicator of their potential.

EPR has the longer history of the two, and its performance over its 27-year history translates to annualized returns of 10.4%. And this is including the recent lagging performance in the rising-rate environment. Vici has only been public since 2017, but has delivered annualized total returns of more than 11% since that point.

For the sake of an example, let's say that I invest $10,000 split between these stocks today, and they match EPR's historic level of performance over the next 25 years. This would make my investment worth about $119,000 at that point, assuming I reinvest all of my dividends along the way. Assuming a roughly 6% dividend yield -- which is significantly less than the average yield of these two stocks today -- I'd be looking at more than $7,100 of retirement income every year from my $10,000 investment.

Again, this isn't guaranteed at all. The actual long-term performance of these REITs could be significantly better or worse. But the point is that you might be surprised by how real estate investment trusts can produce an income-generating nest egg over time. Now imagine if you had a 30- or 40-year timetable, or if you added to your investment every year along the way.

Should you invest $1,000 in Vici Properties right now?

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Matt Frankel has positions in EPR Properties and Vici Properties. The Motley Fool has positions in and recommends Vail Resorts and Vici Properties. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.