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.
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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. Here are 10 of the best REITs to buy in 2025, according to Morningstar analysts:
| REIT | Dividend yield | Implied upside from Dec. 6 close |
| American Tower Corp. (ticker: AMT) | 3.3% | 11.1% |
| Realty Income Corp. (O) | 5.6% | 33.5% |
| Crown Castle Inc. (CCI) | 6.2% | 32.5% |
| SBA Communications Corp. (SBAC) | 1.8% | 20.2% |
| Invitation Homes Inc. (INVH) | 3.3% | 22.4% |
| Sun Communities Inc. (SUI) | 3.0% | 37.9% |
| Healthpeak Properties Inc. (DOC) | 5.6% | 42.7% |
| Host Hotels & Resorts Inc. (HST) | 4.3% | 22.3% |
| Federal Realty Investment Trust (FRT) | 3.9% | 24.7% |
| Americold Realty Trust Inc. (COLD) | 3.8% | 36.2% |
American Tower Corp. (AMT)
American Tower is a specialized REIT that operates the world’s largest independent portfolio of wireless communications and broadcast towers. Analyst Samuel Siampaus says improving activity by domestic wireless carriers will help American Towers generate accelerating revenue growth. Siampaus says 5G investment has reached a cyclical low, and carriers are looking to improve the density of their coverage by emphasizing co-locations. In international markets, Siampaus says Africa will be a key growth catalyst. He projects American Tower will expand its overall operating margin to 48% by 2028. Morningstar has a “buy” rating and $230 fair value estimate for AMT stock, which closed at $207.10 on Dec. 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 5.6% dividend yield and makes monthly dividend payments, making it an attractive income source. Analyst Kevin Brown says most of Realty’s retail tenants operate service-oriented businesses or other defensive models that protect them from e-commerce competition. Morningstar has a “buy” rating and $75 fair value estimate for O stock, which closed at $56.17 on Dec. 6.
Crown Castle Inc. (CCI)
Crown Castle is a specialty REIT that owns and operates wireless communications towers. The REIT pays a 6.2% dividend, the highest on this list. Siampaus says churn related to Sprint has weighed on Crown Castle’s growth, and the recent pace of carrier upgrades remains lackluster compared to recent years. Nevertheless, he says leasing activity is solid and Crown Castle is taking the necessary steps to protect its core tower business. Siampaus says management is also conducting a thorough review of its fiber business strategy. Morningstar has a “buy” rating and $135 fair value estimate for CCI stock, which closed at $101.85 on Dec. 6.
SBA Communications Corp. (SBAC)
SBA Communications is yet another specialized REIT that owns and operates a wireless communications tower network, which in SBA’s case is a worldwide network. Siampaus says SBA is benefiting from improving U.S. carrier activity, particularly its focus on co-locations. In addition, the company continues to invest in expanding its global tower network, including the recent acquisition of 7,000 towers in Central America from Millicom for $975 million. SBA is now the largest tower operator in Central America, and Siampaus says these types of opportunistic deals will continue to boost profitability and create value. Morningstar has a “buy” rating and $265 fair value estimate for SBAC stock, which closed at $220.38 on Dec. 6.
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 of properties is well diversified, with 37% of its properties in the Western U.S. and 53% in the Southeast. Because the cost of home ownership is higher than renting in many of these markets, Brown says Invitation can maintain high occupancy rates and raise rents without losing many tenants. In addition, he says the company’s ability to hire its own maintenance and repair technicians supports operating margins. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $33.49 on Dec. 6.
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Sun Communities Inc. (SUI)
Sun Communities owns and operates manufactured housing communities, primarily in the U.S. Midwest and Southeast. Brown says Sun has aggressively acquired properties in the past 15 years, boosting its portfolio from 136 properties at the end of 2010 to more than 660 today. Sun’s tenants own their manufactured homes, boats and residential vehicles, but they pay Sun rent to park in their communities. Brown says the company focuses on properties that are appealing as vacation properties or second homes near major bodies of water. Morningstar has a “buy” rating and $172 fair value estimate for SUI stock, which closed at $124.69 on Dec. 6.
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 and other top health care REITs have disproportionately benefited from the Affordable Care Act. In addition, he says an aging baby boomer generation should continue to support health care spending and health care facility demand over the next decade. Morningstar has a “buy” rating and $30.50 fair value estimate for DOC stock, which closed at $21.38 on Dec. 6.
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 are highly correlated to the overall U.S. economy, which is well positioned heading into 2025. Because hotel occupancy varies on a night-to-night basis, hotels rapidly reflect changes in the overall economy compared to properties with long-term residential or commercial leases. Brown says the hotel segment took a huge hit during the COVID-19 pandemic, but it should continue to recover to pre-pandemic levels by 2027. Morningstar has a “buy” rating and $23 fair value estimate for HST stock, which closed at $18.80 on Dec. 6.
Federal Realty Investment Trust (FRT)
Federal Realty Investment Trust is a retail REIT that owns and manages community and neighborhood shopping centers. Including dividends, the stock is up 14% year to date, the best performance of any REIT on this list. Brown says Federal Realty has focused on acquiring high-quality shopping centers and mixed-use properties in eight of the most desirable metropolitan regions of the U.S. As a result, among all retail REITs, Brown estimates Federal Realty’s portfolio is exposed to locations with the highest population density and highest median household income. Morningstar has a “buy” rating and $142 fair value estimate for FRT stock, which closed at $113.89 on Dec. 6.
Americold Realty Trust Inc. (COLD)
Americold Realty Trust is the world’s largest owner and operator of temperature-controlled cold storage warehouses. These facilities primarily hold perishable food products, but they also hold additional temperature-sensitive items, such as florals, pharmaceuticals and chemicals. Including dividends, the stock is down 21.6% year to date, the worst performance on this list. Fortunately, the falling share price has bumped Americold’s dividend yield up to 3.8%. Analyst Suryansh Sharma says Americold’s convenient locations and ancillary services, such as flash freezing and transportation, help it attract and maintain customers. Morningstar has a “buy” rating and $31.50 fair value estimate for COLD stock, which closed at $23.13 on Dec. 6.
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10 of the Best REITs to Buy for 2025 originally appeared on usnews.com
Update 12/09/24: This story was previously published at an earlier date and has been updated with new information.
