Real estate investments can be an excellent way to earn returns, generate cash flow, hedge against inflation and diversify an investment portfolio. But buying physical properties can be costly, difficult and risky for an individual. Instead, investors can buy shares of diversified real estate investment trusts, or REITs. REITs are public companies that own large portfolios of real estate, and many of them also pay sizable dividends. There are many different types of REITs, providing investors access to residential, commercial and specialty real estate.
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Here are nine of the best REITs to buy in 2024, according to Morningstar analysts:
| REIT stock | Forward dividend yield |
| American Tower Corp. (ticker: AMT) | 3.4% |
| Welltower Inc. (WELL) | 2.6% |
| Public Storage (PSA) | 4.2% |
| Crown Castle Inc. (CCI) | 5.6% |
| Realty Income Corp. (O) | 5.9% |
| Extra Space Storage Inc. (EXR) | 4.5% |
| AvalonBay Communities Inc. (AVB) | 3.8% |
| Equity Residential Properties Trust (EQR) | 4.4% |
| SBA Communications Corp. (SBAC) | 1.9% |
American Tower Corp. (AMT)
American Tower is a specialty REIT that operates the world’s largest independent portfolio of wireless communications and broadcast towers. Analyst Matthew Dolgin says American Tower reported generally positive results in the fourth quarter despite several industry headwinds. Dolgin says the company may face ongoing churn due to Sprint contract expirations in 2024, but those cancellations should not extend into 2025. He says American Tower is well positioned to benefit from growing global demand for mobile data and says the company’s tower business is very impressive. Morningstar has a “buy” rating and $215 fair value estimate for AMT stock, which closed at $206.15 on March 4.
Welltower Inc. (WELL)
Welltower is a health care REIT that invests in health care facilities, including senior housing, specialty care facilities and medical office buildings. The REIT is up 4.3% this year through March 4, the best total return of any stock on this list. Analyst Kevin Brown says double-digit percentage growth in net operating income, or NOI, for Welltower’s senior housing portfolio continued in the most recent quarter, and senior housing same-store occupancy increased 110 basis points sequentially. Company guidance calls for between 15% and 21% growth in senior housing same-store NOI in 2024. Morningstar has a “buy” rating and $103 fair value estimate for WELL stock, which closed at $93.40 on March 4.
Public Storage (PSA)
Public Storage is a specialty REIT that is the largest owner of self-storage facilities in the U.S. Analyst Suryansh Sharma says growth in the self-storage market will likely slow in 2024 following several years of pandemic-fueled growth. Public Storage’s 2024 guidance confirms this slowdown with its prediction for negative same-store NOI growth this year. Sharma says larger industry players like Public Storage will continue to gain market share in the long term, as rental growth and occupancy levels normalize. Morningstar has a “buy” rating and $317 fair value estimate for PSA stock, which closed at $285.08 on March 4.
Crown Castle Inc. (CCI)
Crown Castle is a specialty REIT that owns and operates wireless communications towers. Dolgin says the negative investor sentiment that plagued Crown Castle in 2023 was overblown, as tower leasing trends remain strong, the company’s fiber business is improving and its dividend is safe. Dolgin says he has confidence in the new CEO, and he believes the company is on the right track and the stock is attractively valued. Morningstar has a “buy” rating and $130 fair value estimate for CCI stock, which closed at $112.80 on March 4.
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Realty Income Corp. (O)
Realty Income is a retail REIT that owns, develops and manages U.S. retail real estate with a focus on single-tenant buildings. It is the largest triple-net REIT in the U.S., meaning tenants pay all property expenses, including real estate taxes, maintenance and building insurance. Realty Income has a 5.9% dividend yield and makes monthly dividend payments, making it an attractive income source. Brown says most of Realty’s clients are in retail but are service oriented and resistant to e-commerce competition or economic downturns. Morningstar has a “buy” rating and $76 fair value estimate for O stock, which closed at $52.71 on March 4.
Extra Space Storage Inc. (EXR)
Extra Space Storage is one of the largest publicly traded self-storage REITs. Sharma says investors should expect negative NOI growth in 2024 given cooling self-storage demand. However, he says the company’s life storage portfolio will perform relatively well this year, and the self-storage business is recession resistant and has experienced strong growth in recent years. Sharma says there are several long-term tailwinds for Extra Space, including societal trends such as downsizing, moving and adding space. Additional storage demand drivers include growing adoption rates, decluttering and urbanization. Morningstar has a “buy” rating and $165 fair value estimate for EXR stock, which closed at $147.48 on March 4.
AvalonBay Communities Inc. (AVB)
AvalonBay Communities is a multifamily residential REIT that specializes in upscale apartment communities. Brown says investors should expect revenue growth to slow in 2024, but apartment demand should support AvalonBay’s growth in the long term. He says the company regularly recycles capital by selling non-core assets and investing in its development pipeline. Brown says supply growth is working against AvalonBay in many of its markets, but he projects the company’s high-quality portfolio will drive same-store funds from operation and NOI growth that will exceed inflation rates. Morningstar has a “buy” rating and $213 fair value estimate for AVB stock, which closed at $185.17 on March 4.
Equity Residential Properties Trust (EQR)
Equity Residential is a multifamily residential REIT that owns and operates a diversified portfolio of apartment properties. Brown says Equity’s 2024 guidance suggests same-store revenue growth of between 2% and 3% in 2024, compared to previous Morningstar estimates of 5.4% growth. However, he says Equity Residential owns high-quality multifamily buildings in attractive urban, coastal markets that allow for high occupancy and strong rent growth in the long term. Brown is bullish on the company’s strategy of selling inland and southern properties and concentrating in its core markets. Morningstar has a “buy” rating and $87 fair value estimate for EQR stock, which closed at $62.86 on March 4.
SBA Communications Corp. (SBAC)
SBA Communications is a specialized REIT that owns and operates a global wireless communications tower network. The stock is down 16.4% through March 4 this year, the worst performance of any stock on this list. Dolgin says SBA’s recent weakness is a buying opportunity, and the stock is undervalued amid a weak U.S. leasing environment and a pullback in carrier spending. He says Sprint contract expirations will remain a headwind, but he is encouraged by the company’s measured approach to financial leverage and capital allocation. Morningstar has a “buy” rating and $250 fair value estimate for SBAC stock, which closed at $212.05 on March 4.
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9 of the Best REITs to Buy for 2024 originally appeared on usnews.com
Update 03/05/24: This story was previously published at an earlier date and has been updated with new information.
