Real estate investments can be an excellent way to earn returns, generate cash flow, hedge against inflation and diversify an investment portfolio. But for many investors, buying physical properties can be costly, difficult and risky.
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Instead, investors can buy shares of diversified real estate investment trusts, or REITs, which are public companies that own large portfolios of real estate and pay dividends. There are many different types of REITs, providing investors access to residential, commercial and specialty real estate. Here are nine of the best REITs to buy in 2024, according to Morningstar analysts:
| REIT Stock | Forward dividend yield* |
| Realty Income Corp. (ticker: O) | 6.0% |
| Crown Castle Inc. (CCI) | 6.5% |
| Equity Residential Properties Trust (EQR) | 3.9% |
| Invitation Homes Inc. (INVH) | 3.1% |
| Ventas Inc. (VTR) | 3.5% |
| SBA Communications Corp. (SBAC) | 2.1% |
| Weyerhaeuser Co. (WY) | 2.9% |
| Boston Properties Inc. (BXP) | 6.5% |
| Healthpeak Properties Inc. (DOC) | 6.2% |
*As of July 2.
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 6% dividend yield and makes monthly dividend payments, making it an attractive income source. Analyst Kevin Brown says most of Realty’s retail tenants are focused on service-oriented businesses or other defensive industry segments. Morningstar has a “buy” rating and $76 fair value estimate for O stock, which closed at $52.36 on July 1.
Crown Castle Inc. (CCI)
Crown Castle International is a specialty REIT that owns and operates wireless communications towers. Crown Castle has a 6.5% dividend, tied for highest of any stock on this list. Analyst Matthew Dolgin says Crown Castle is very attractively valued following a solid quarter. Unfortunately, new tower investments by mobile carriers have remained depressed and small cell revenue growth is accelerating. Dolgin says the installment of a new CEO and the company’s fiber segment operations review have him optimistic Crown Castle has several opportunities ahead to rebound, however. Morningstar has a “buy” rating and $130 fair value estimate for CCI stock, which closed at $95.98 on July 1.
Equity Residential Properties Trust (EQR)
Equity Residential is a multifamily residential REIT that owns and operates a diversified portfolio of apartment properties. The stock is up 13.7% this year through July 1, including dividends, the best performance of any REIT on this list. Brown says the U.S. REIT group as a whole is trading at a significant discount to fair value, and Realty Income is no exception. He says the company has improved its portfolio in the past decade, exiting inland and rural markets and focusing on operating high-quality, multifamily buildings in coastal, urban markets. Morningstar has a “buy” rating and $79 fair value estimate for EQR stock, which closed at $68.14 on July 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 Homes is geographically diversified, with 37% of its properties in the Western U.S., 31% in Florida and 22% in other Southeastern markets. The markets are supportive of high occupancy rates because the cost of homeownership is higher than the cost of renting in most areas. Brown says Invitation has high pricing power, and its in-house maintenance business allows it to maintain higher operating margins than competitors who are forced to hire contractors. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $35.78 on July 1.
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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 the top health care real estate owners and operators will continue to disproportionately benefit from the Affordable Care Act, which created an increased focus on higher-quality care in lower-cost settings. As the baby boomer generation ages, its health care spending will rise. Brown says the number of Americans in their 80s and older will nearly double in the next 10 years. Morningstar has a “buy” rating and $69 fair value estimate for VTR stock, which closed at $50.88 on July 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 24.4% this year, the worst performance of any stock on this list. Dolgin says SBA’s underwhelming first-quarter results are one of the primary reasons for the stock’s underperformance, but its numbers were mostly in-line with previous 2024 guidance. Fortunately, Dolgin says the recent drop-off in carrier spending is not permanent. He says SBA has taken advantage of the weak market by focusing on share buybacks and debt reduction. Morningstar has a “buy” rating and $250 fair value estimate for SBAC stock, which closed at $189.78 on July 1.
Weyerhaeuser Co. (WY)
Weyerhaeuser is a specialty REIT that grows timber and produces and sells forest products and pulp. Analyst Spencer Liberman says China and other export markets have weakened, but domestic demand and pricing has remained solid. Liberman projects positive growth in the repair and remodel market, as well as gains in single-family housing starts in 2024. He says those drivers should support demand for lumber and engineered wood products in the second half of the year. He projects 4% growth in single-family housing starts this year. Morningstar has a “buy” rating and $35 fair value estimate for WY stock, which closed at $27.56 on July 1.
Boston Properties Inc. (BXP)
Boston Properties is an office REIT that owns office buildings in Boston, New York City, Los Angeles, San Francisco and Washington, D.C. Analyst Suryansh Sharma says Boston Properties’ 5.5 million square feet of life sciences space and 5.8 million square feet of additional development potential will benefit from growth in the life sciences sector. Sharma says the company’s strategy is to own and develop top-tier properties that can support premium rental rates and maintain high occupancy levels throughout economic cycles. Morningstar has a “buy” rating and $91 fair value estimate for BXP stock, which closed at $60.69 on July 1.
Healthpeak Properties Inc. (DOC)
Healthpeak Properties is a health care real REIT that invests in life science and medical office properties and other health care facilities throughout the U.S. Healthpeak recently completed a merger with Physicians Realty Trust, and the combined company began trading under the ticker DOC in March 2024. Brown says Healthpeak made the understandable decision to divest around $4 billion in senior housing assets during the COVID-19 pandemic in 2020, so life sciences and medical office properties are now prominently featured in its holdings. Morningstar has a “buy” rating and $30.50 fair value estimate for DOC stock, which closed at $19.47 on July 1.
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9 of the Best REITs to Buy for 2024 originally appeared on usnews.com
Update 07/02/24: This story was previously published at an earlier date and has been updated with new information.
