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 |
| Welltower Inc. (ticker: WELL) | 2.7% |
| Realty Income Corp. (O) | 5.8% |
| Crown Castle Inc. (CCI) | 5.9% |
| Extra Space Storage Inc. (EXR) | 4.4% |
| AvalonBay Communities Inc. (AVB) | 3.8% |
| Equity Residential Properties Trust (EQR) | 4.3% |
| SBA Communications Corp. (SBAC) | 1.8% |
| Invitation Homes Inc. (INVH) | 3.2% |
| Ventas Inc. (VTR) | 4.2% |
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 2.7% (including dividends) this year through April 1, the best performance of any stock on this list. Analyst Kevin Brown says Welltower is a top U.S. health care REIT and should continue to benefit from the Affordable Care Act. Brown projects the population of 80-and-older Americans will nearly double in the next decade as the baby boomer generation creates health care industry tailwinds. Morningstar has a “buy” rating and $107 fair value estimate for WELL stock, which closed at $91.99 on April 1.
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 real estate taxes, maintenance and building insurance. Realty Income has a 5.8% dividend yield and makes monthly dividend payments, making it an attractive income source. Brown says Realty Income’s retail tenants are focused in defensive segments, such as businesses that are recession-resistant and insulated from e-commerce competition. Morningstar has a “buy” rating and $76 fair value estimate for O stock, which closed at $53.46 on April 1.
Crown Castle Inc. (CCI)
Crown Castle is a specialty REIT that owns and operates wireless communications towers. Crown Castle has a 5.9% dividend, the highest of any stock on this list. Analyst Matthew Dolgin says the negative headlines that plagued Crown Castle in 2023 were mostly overblown, and the company’s tower leasing business remains strong in 2024. Dolgin is optimistic the company’s new CEO has Crown Castle moving in the right direction, the company’s fiber business has already improved dramatically and Crown Castle has a healthy amount of liquidity. Morningstar has a “buy” rating and $130 fair value estimate for CCI stock, which closed at $104.26 on April 1.
Extra Space Storage Inc. (EXR)
Extra Space Storage is one of the largest publicly traded self-storage REITs. Analyst Suryansh Sharma says Extra Space’s insurance business is extremely profitable, and its third-party management business is also strategically important, allowing the company to increase its data sophistication and expand its scale and geographical footprint with minimal capital investment. Sharma is bullish on the company’s strategy of investing in densely populated, high-income urban areas. He says self-storage has historically been a recession-resistant, defensive industry that could serve investors well in an unpredictable macroeconomic environment. Morningstar has a “buy” rating and $160 price target for EXR stock, which closed at $146.74 on April 1.
AvalonBay Communities Inc. (AVB)
AvalonBay Communities is a multifamily residential REIT that specializes in upscale apartment communities. Brown says AvalonBay’s properties are concentrated in attractive markets that are experiencing income growth, job growth and falling homeownership rates. These characteristics coupled with a high relative cost of single-family housing and an influx of young professionals support strong apartment demand. Brown says AvalonBay has a sound strategy of regularly selling off non-core assets and using proceeds for acquisitions or development projects. He says the REIT has also created significant value from its development business. Morningstar has a “buy” rating and $213 price target for AVB stock, which closed at $181.32 on April 1.
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 Residential has a history of opportunistic asset sales and acquisitions. Equity has restructured its portfolio to focus primarily on owning and operating high-quality multifamily buildings in coastal, urban markets that have favorable demographic trends, strong rent growth opportunities and high occupancy rates. This restructuring strategy has involved divesting inland properties and expanding into high-growth core markets, such as Los Angeles, San Diego, San Francisco, Washington, D.C., New York, Boston and Seattle. Morningstar has a “buy” rating and $79 fair value estimate for EQR stock, which closed at $61.45 on April 1.
SBA Communications Corp. (SBAC)
SBA Communications is a specialized REIT that owns and operates a global wireless communications tower network. The stock is down 15.3% this year, the worst performance of any stock on this list. Dolgin says SBA has put together solid numbers despite headwinds from a pullback in carrier spending. He says expiring Sprint contracts will continue to weigh on growth numbers in coming years, but SBA’s new deal with Brazilian telecom Vivo is a win. Dolgin says SBA’s tower business is extremely valuable as data use continues to grow indefinitely. Morningstar has a “buy” rating and $250 fair value estimate for SBAC stock, which closed at $213.92 on April 1.
Invitation Homes Inc. (INVH)
Invitation Homes owns, operates and leases single-family U.S. homes in the starter and move-up categories. Brown says Invitation’s portfolio is geographically diversified, with about 37% of its homes in the western U.S., 31% in Florida and 22% throughout the rest of the Southeast. He says the cost of rent is lower than the cost of homeownership in many of Invitation’s markets, a dynamic that should support high occupancy rates for the foreseeable future. The company’s in-house repair and maintenance businesses also support operating margins. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $35.07 on April 1.
Ventas Inc. (VTR)
Ventas is a health care REIT that specializes in health care facilities, including specialty care facilities, housing for seniors, medical office buildings and hospitals. Brown says Ventas has a top-tier asset portfolio that is highly exposed to top operators in attractive markets, including medical office buildings, senior housing, hospitals and life sciences. In addition, partnerships with Ardent Health Services and Wexford Science & Technology could help Ventas unlock future value in health care delivery, and Ventas should benefit from a spike in demand for senior housing in coming years. Morningstar has a “buy” rating and $70 fair value estimate for VTR stock, which closed at $42.86 on April 1.
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Update 04/02/24: This story was previously published at an earlier date and has been updated with new information.
