From 1992 to 2017, real estate investment trusts (REITs) have outperformed all other major asset classes with an annualized total return of 10.8%, per S&P Global. With interest rates rising, there are ongoing concerns about REITs underperforming.

Although high interest rates negatively impact home values and increase borrowing costs for REITs, that does not mean returns are doomed. Since the early 1970s, there have been six periods during which 10-Year U.S. Treasury Bond yields rose significantly, and out of those periods, U.S. REITs earned positive returns during four of them.

Here are two high-yielding REITs to increase diversification and hedge against inflation.

W.P. Carey Inc (NYSE:WPC) is offering a dividend yield of 5.02% or $4.24 per share annually, making quarterly payments, with a notable track record of increasing its dividends for 24 years. W.P. Carey ranks among the largest net lease REITs principally involved in the ownership of properties located in the U.S., Western Europe, and Northern Europe.

W.P. Carey's portfolio includes 1,390 net lease properties covering approximately 170 million square feet and a portfolio of 84 self-storage operating properties, as of June 30, 2022.

On Sept. 15, the company's board of directors increased its quarterly cash dividend to $1.061 per share, from $1.059 per share in the second quarter, and up from $1.057 per share in the first quarter of 2022.

Also Read: 6 Analysts Have This to Say About Apartment Income REIT

Innovative Industrial Properties Inc (NYSE:IIPR) is offering a dividend yield of 7.03% or $7.00 per share annually, through quarterly payments, with a decent track record of increasing its dividends for five years. Innovative Industrial Properties is the first and only real estate company on the New York Stock Exchange focused on the regulated U.S. cannabis industry.

Innovative Industrial Properties board of directors has declared a third quarter 2022 dividend of $1.80 per share on Sept. 15, 2022. The common stock dividends declared for the twelve months ending Sept. 30, 2022, of $6.80 per common share represent an increase of $1.34, or 25%, over dividends declared for the twelve months ending Sept. 30, 2021.