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 for an individual. Instead, investors can buy shares of diversified real estate investment trusts, or REITs.
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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. Here are 10 of the best REITs to buy in 2024, according to Morningstar analysts:
| REIT Stock | Forward Dividend Yield* | Implied Upside** |
| Ventas Inc. (ticker: VTR) | 2.9% | 10.3% |
| Realty Income Corp. (O) | 5.0% | 19.6% |
| Crown Castle Inc. (CCI) | 5.5% | 18.6% |
| BXP Inc. (BXP) | 5.3% | 22.3% |
| SBA Communications Corp. (SBAC) | 1.7% | 11.5% |
| Invitation Homes Inc. (INVH) | 3.0% | 10.2% |
| Weyerhaeuser Co. (WY) | 2.7% | 16.1% |
| Healthpeak Properties Inc. (DOC) | 5.4% | 37.5% |
| Kimco Realty Corp. (KIM) | 4.1% | 9.2% |
| Host Hotels & Resorts Inc. (HST) | 4.7% | 41.8% |
*As of Sept. 5.**As of Sept. 4 close.
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. The REIT is up 27.9% on a total return basis this year through Sept. 4, the best performance of any stock on this list. Analyst Kevin Brown says senior housing same-store occupancy of 85.6% in the second quarter exceeded expectations, but same-store revenue growth of 8% was a disappointment. Brown says Ventas’ 8.3% average cap rate on its 10 senior housing property acquisitions in the quarter was particularly impressive. Morningstar has a “buy” rating and $69 fair value estimate for VTR stock, which closed at $62.55 on Sept. 4.
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% dividend yield and makes monthly dividend payments, making it an attractive income source. Brown says Realty’s 6.3% adjusted funds from operation growth in the second quarter was strong, but its acquisition volume has slowed. Morningstar has a “buy” rating and $75 fair value estimate for O stock, which closed at $62.71 on Sept. 4.
Crown Castle Inc. (CCI)
Crown Castle International is a specialty REIT that owns and operates wireless communications towers. Crown Castle has a 5.5% dividend, the highest of any stock on this list. Analyst Samuel Siampaus says he has largely disagreed with Crown Castle’s push into the fiber business that began in 2015. However, the company is reportedly reviewing the fiber business for a potential sale and reduced its fiber spending guidance. Siampaus says Crown Castle’s tower business will continue to benefit from carriers upgrading their networks to 5G. Morningstar has a “buy” rating and $135 fair value estimate for CCI stock, which closed at $113.83 on Sept. 4.
BXP Inc. (BXP)
BXP 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 it may take several more years for the office sector to fully recover from the COVID-19 pandemic, but BXP’s valuation is appealing for long-term investors. Sharma says the company’s 5.3 million square feet of life sciences space creates opportunity for future development and gives BXP exposure to the high-growth markets in the burgeoning life sciences industry. Morningstar has a “buy” rating and $91 fair value estimate for BXP stock, which closed at $74.43 on Sept. 4.
SBA Communications Corp. (SBAC)
SBA Communications is a specialized REIT that owns and operates a global wireless communications tower network. Siampaus says lackluster carrier activity and high customer churn in the U.S. and Brazil have weighed on SBA’s growth numbers, a trend he expects will continue through at least the end of 2024. However, Siampaus says he is optimistic about a potential rebound in carrier activity in 2025, as SBA’s domestic and international portfolios benefit from rapid growth in global wireless data consumption and ongoing 5G network upgrades. Morningstar has a “buy” rating and $260 fair value estimate for SBAC stock, which closed at $233.22 on Sept. 4.
[READ: 5 Best Passive Investing Options for Income]
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 4.8% same-store revenue growth in the second quarter exceeded his expectations. The company added 7,200 homes to its portfolio in the second quarter, and Brown says those acquisitions were expensive given the current interest rate environment. Nevertheless, he is bullish on the company’s strategy of rapidly expanding its management platform, which should generate significant revenue without requiring Invitation to take on expensive debt. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $37.22 on Sept. 4.
Weyerhaeuser Co. (WY)
Weyerhaeuser is a specialty REIT that grows timber and produces and sells forest products and pulp. Analyst Spencer Liberman says higher interest rates have stagnated existing home sales, and repair and remodel demand has been soft. Liberman says the environment will likely remain difficult for Weyerhaeuser in the near term, but a hot new residential construction market should support lumber demand until existing home sales recover. The Federal Reserve is expected to cut interest rates this month, which could stimulate existing home sales. Morningstar has a “buy” rating and $35 fair value estimate for WY stock, which closed at $30.15 on Sept. 4.
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. Brown says top health care REITs will continue to benefit from an aging baby boomer generation. He projects the 80-plus population will nearly double in size over the next 10 years, significantly boosting health care spending. Morningstar has a “buy” rating and $30.50 fair value estimate for DOC stock, which closed at $22.18 on Sept. 4.
Kimco Realty Corp. (KIM)
Kimco Realty is a retail REIT that is one of the largest U.S. owners and operators of neighborhood and community shopping centers. Brown says Kimco’s 91.7% small-shop occupancy rate in the second quarter is impressive. In addition, Kimco reported a 9% renewal spread in the quarter, its highest in four years. Renewal spread is the percentage difference between the net effective rent on a new lease versus a prior lease. Brown says Kimco’s portfolio improvement in recent years will also create value for investors. Morningstar has a “buy” rating and $25.50 fair value estimate for KIM stock, which closed at $23.35 on Sept. 4.
Host Hotels & Resorts Inc. (HST)
Host Hotels & Resorts is a hotel and resort REIT that owns luxury hotels in North and South America. The REIT is down 11.2% through Sept. 4 this year, the worst performance on this list. Brown says the 2023 wildfires in Maui continue to weigh on Host’s growth numbers. He says it may take a while for Host’s Maui hotels to fully recover, but they will eventually serve as a growth tailwind for long-term investors. Brown is encouraged by Host’s two hotel acquisitions in the second quarter. Morningstar has a “buy” rating and $24 fair value estimate for HST stock, which closed at $16.93 on Sept. 4.
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10 of the Best REITs to Buy for 2024 originally appeared on usnews.com
Update 09/05/24: This story was previously published at an earlier date and has been updated with new information.
