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, or REITs, which are public companies that own large portfolios of real estate and pay dividends to investors. There are many different types of REITs, providing 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* | Upside Potential** |
| Realty Income Corp. (ticker: O) | 5.1% | 20.2% |
| Crown Castle Inc. (CCI) | 5.4% | 16.6% |
| Invitation Homes Inc. (INVH) | 3.3% | 19.3% |
| Sun Communities Inc. (SUI) | 2.8% | 29.2% |
| Healthpeak Properties Inc. (DOC) | 5.4% | 36.5% |
| Host Hotels & Resorts Inc. (HST) | 4.6% | 36.6% |
| Federal Realty Investment Trust (FRT) | 3.9% | 27.7% |
| Kilroy Realty Corp. (KRC) | 5.7% | 55.9% |
| Macerich Co. (MAC) | 3.8% | 35.7% |
| Park Hotels & Resorts Inc. (PK) | 7.1% | 77.3% |
*As of Oct. 3.**As of Oct. 2 close.
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 5.1% dividend yield and makes monthly dividend payments, making it an attractive income source. Analyst Kevin Brown says Realty’s impressive operating metrics and defensive retail tenants make the company’s dividend an extremely stable income source for investors. Morningstar has a “buy” rating and $75 fair value estimate for O stock, which closed at $62.42 on Oct. 2.
Crown Castle Inc. (CCI)
Crown Castle International is a specialty REIT that owns and operates wireless communications towers. Analyst Samuel Siampaus says Crown’s aggressive push into the fiber business in the past decade was a mistake, but the company’s recent announcement that it’s strategically reviewing the fiber business for a potential sale is a positive move and an opportunity to raise cash. Siampaus says Crown Castle shares are attractively valued and its tower business will continue to grow as global wireless carriers upgrade their 5G networks to meet booming data demand. Morningstar has a “buy” rating and $135 fair value estimate for CCI stock, which closed at $115.78 on Oct. 2.
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 property portfolio is highly geographically diversified across the Western U.S., Florida and the rest of the Southeast. He says the cost of renting is lower than the cost of home ownership in many of these markets, a dynamic that supports high occupancy rates and rent growth. Invitation can also hire its own repair and maintenance technicians, helping control costs and maintain higher margins than smaller competitors. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $34.38 on Oct. 2.
Sun Communities Inc. (SUI)
Sun Communities owns and operates manufactured housing communities, primarily in the Midwest and Southeast. Brown says Sun has expanded its portfolio rapidly in the past 15 years. He says the company targets properties that would be appealing as vacation properties or second homes, with nearly half of its portfolio located near major bodies of water in Florida and Michigan. Sun’s tenants own their manufactured homes, vehicles and boats and simply pay Sun for the right to park and live in their communities. Morningstar has a “buy” rating and $172 fair value estimate for SUI stock, which closed at $133.15 on Oct. 2.
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 estimates the number of Americans aged 80 or higher will nearly double in the next decade. He says people in this age range spend more than four times the national average on health care. Morningstar has a “buy” rating and $30.50 fair value estimate for DOC stock, which closed at $22.34 on Oct. 2.
[READ: 5 Best Passive Investing Options for Income]
Host Hotels & Resorts Inc. (HST)
Host Hotels & Resorts is a hotel and resort REIT that owns luxury hotels in North and South America. Brown says hotel REITs have some of the most volatile share prices in the industry, and they tend to be highly correlated to the U.S. economy. Host and other hotel REITs benefit from booming business travel when the economy is expanding, and the U.S. economic outlook is attractive heading into 2025. Morningstar has a “buy” rating and $24 fair value estimate for HST stock, which closed at $17.57 on Oct. 2.
Federal Realty Investment Trust (FRT)
Federal Realty Investment Trust is a retail REIT that owns and manages community and neighborhood shopping centers. Brown says Federal Realty’s portfolio of properties has the highest average location population density and median household income in the retail REIT market. These quality locations generate strong demand for Federal Realty’s shopping centers, resulting in impressive same-store net operating income growth and double-digit re-leasing spreads. Brown says Federal Realty’s properties are reliable investments, attracting tenants and shoppers even in a difficult retail environment. Morningstar has a “buy” rating and $142 fair value estimate for FRT stock, which closed at $111.16 on Oct. 2.
Kilroy Realty Corp. (KRC)
Kilroy Realty is an office REIT that owns and develops life sciences and other office properties in Los Angeles, Seattle, San Diego, San Francisco and Austin. Brown says Kilroy’s investments in large metropolitan areas on the West Coast were timed well to take advantage of high-growth technology and life science market clusters. Brown says a growing number of these tech companies are requiring employees to return to the office full time. He says offices play an essential role in innovation, collaboration and company culture. Morningstar has a “buy” rating and $59 fair value estimate for KRC stock, which closed at $37.85 on Oct. 2.
Macerich Co. (MAC)
Macerich is a retail REIT that owns and manages regional and community shopping centers throughout the U.S. Even after its strong performance this year, Brown says Macerich shares remain undervalued. He says the company has done a tremendous job of divesting lower-quality properties, acquiring new Class A malls and consolidating and redeveloping its existing portfolio. Today, Brown says Macerich is generating higher occupancy levels, tenant sales productivity and rent revenue. Morningstar has a “buy” rating and $24 fair value estimate for MAC stock, which closed at $17.68 on Oct. 2.
Park Hotels & Resorts Inc. (PK)
Park Hotels & Resorts is a hotel and resort REIT that owns and operates a portfolio of mostly hotel properties in the U.S. Since its spinoff from Hilton Worldwide in 2017, Brown says Park has successfully divested 23 lower-quality U.S. hotels and its entire international portfolio to focus on high-quality assets in domestic, getaway markets. He says Park’s property renovations will help it generate solid revenue growth and industry-leading revenue-per-available-room growth. Morningstar has a “buy” rating and $25 fair value estimate for PK stock, which closed at $14.10 on Oct. 2.
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10 of the Best REITs to Buy for 2024 originally appeared on usnews.com
Update 10/03/24: This story was previously published at an earlier date and has been updated with new information.
