Real estate investments can be an excellent way to earn returns, generate cash flow, hedge against inflation and diversify an investment portfolio. However, buying physical properties can be costly, difficult and risky.
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Instead, you can buy shares of diversified real estate investment trusts. REITs are public companies that own large portfolios of real estate, and many of them also pay sizable dividends. There are many 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* | Implied Upside* |
| Realty Income Corp. (ticker: O) | 5.3% | 26.7% |
| Crown Castle Inc. (CCI) | 5.7% | 21.9% |
| Healthpeak Properties Inc. (DOC) | 5.8% | 47.1% |
| Equity Residential Properties Trust (EQR) | 3.9% | 14.2% |
| BXP Inc. (BXP) | 5.9% | 38.6% |
| SBA Communications Corp. (SBAC) | 1.8% | 17.6% |
| Weyerhaeuser Co. (WY) | 2.6% | 12.4% |
| Ventas Inc. (VTR) | 3.2% | 23.9% |
| Invitation Homes Inc. (INVH) | 3.2% | 18.3% |
*As of Aug. 6.
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 5.3% dividend yield and makes monthly dividend payments, making it an attractive income source. Analyst Kevin Brown says most of Realty’s retail tenants have defensive, service-oriented businesses that are insulated from e-commerce competition. Morningstar has a “buy” rating and $75 fair value estimate for O stock, which closed at $59.18 on Aug. 5.
Crown Castle Inc. (CCI)
Crown Castle International is a specialty REIT that owns and operates wireless communications towers. Crown Castle has a 5.7% dividend. Analyst Samuel Siampaus says Crown Castle’s renewed focus on its fiber business will benefit shareholders. Siampaus estimates the fiber business will grow 4% annually in the coming years as Crown Castle builds roughly 9,000 small cells per year. In addition, he says the company’s tower business will continue to benefit from 5G carrier upgrades and growing data demand. Morningstar has a “buy” rating and $135 fair value estimate for CCI stock, which closed at $110.77 on Aug. 5.
Healthpeak Properties Inc. (DOC)
Healthpeak Properties is a health care 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’s aggressive share buyback program, including 4.6 million shares in the second quarter and 10.5 million shares this year, will create value for shareholders given the REIT’s undervalued stock. Morningstar has a “buy” rating and $30.50 fair value estimate for DOC stock, which closed at $20.74 on Aug. 5.
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 about 15% this year including dividends, the best performance of any REIT on this list. Brown says Equity’s portfolio is focused on high-quality, multifamily buildings in urban, coastal markets that have strong rent growth and high occupancy rates. In the past decade, he says the company has divested many of its inland and southern assets and focused on high-growth core markets such as Los Angeles, San Francisco, San Diego, Washington, D.C., New York, Boston and Seattle. Morningstar has a “buy” rating and $79 fair value estimate for EQR stock, which closed at $69.17 on Aug. 5.
[READ: 5 Best Passive Investing Options for Income]
BXP Inc. (BXP)
BXP is an office REIT that owns office buildings in Boston, New York, Los Angeles, San Francisco and Washington, D.C. Analyst Suryansh Sharma says BXP’s office portfolio has a long road to recovery. Same-store office portfolio occupancy was down 240 basis points year over year in the second quarter. Same-store net operating income after excluding termination income was also down 4.4% on an annual basis. Nevertheless, Sharma says Boston Properties will benefit from the burgeoning life sciences industry in the long term. Morningstar has a “buy” rating and $91 fair value estimate for BXP stock, which closed at $65.65 on Aug. 5.
SBA Communications Corp. (SBAC)
SBA Communications is a specialized REIT that owns and operates a global wireless communications tower network. The stock is down about 12% this year, the worst performance of any stock on this list. Siampaus says SBA’s financial performance has been consistent, but growth has been tepid due to lackluster carrier activity. Investors should expect that weakness to continue in the near term, but Siampaus is optimistic about a 2025 rebound. In the longer term, he says 5G carrier upgrades and wireless data consumption growth should be growth tailwinds. Morningstar has a “buy” rating and $260 fair value estimate for SBAC stock, which closed at $221.11 on Aug. 5.
Weyerhaeuser Co. (WY)
Weyerhaeuser is a specialty REIT that grows timber and produces and sells forest products and pulp. Analyst Spencer Liberman says the stagnant U.S. housing market remains a challenge for Weyerhaeuser, but the REIT could get some relief if the Federal Reserve starts cutting interest rates in the near future. Liberman says new residential construction strength should support lumber demand until the existing home sales market recovers. He says oriented strand board sales have been a silver lining and have helped offset lumber weakness. Morningstar has a “buy” rating and $35 fair value estimate for WY stock, which closed at $31.13 on Aug. 5.
Ventas Inc. (VTR)
Ventas is a REIT that specializes in health care facilities, including specialty care facilities, housing for seniors, medical office buildings and hospitals. Brown says top health care owners are still benefiting from the Affordable Care Act. As the baby boomer generation continues to age, Brown estimates the U.S. population of 80 years or older will nearly double over the next 10 years. He says the 80-plus population spends more than four times as much on health care per capita than the national average. Morningstar has a “buy” rating and $69 fair value estimate for VTR stock, which closed at $55.67 on Aug. 5.
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 has generated impressive same-store sales growth, including 4.8% growth in the second quarter. In addition, he says the company’s expansion of its management services business by nearly 3,000 homes should help generate significant revenue growth without requiring the company to take on expensive debt. Invitation will also provide management services to all 4,400 homes in its Upward America joint venture. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $34.67 on Aug. 5.
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9 of the Best REITs to Buy for 2024 originally appeared on usnews.com
Update 08/06/24: This story was previously published at an earlier date and has been updated with new infomration.
