REITs, or Real Estate Investment Trusts, are a great way to invest in real estate without buying huge properties, renovating homes, or becoming a landlord.
The “best” REITs will depend on your specific goals and the types of real estate projects you want to invest in (ie: commercial, residential, mortgage, etc). But certain REITs stand out as the most popular, and that is what this article is all about.
10 REITs to Watch in 2023
- American Tower Corporation (AMT) is a real estate investment trust that owns and operates a portfolio of cell towers. It is one of the world’s largest and most diversified REITs, with over $100 billion market capitalization. AMT has a strong track record of dividend growth, with its dividend yield currently at 2.5%.
- Public Storage (PSA) is a self-storage REIT that owns and operates over 2,600 self-storage facilities in the United States. PSA is a defensive REIT, meaning its business is less sensitive to economic downturns. It has a dividend yield of 3.6%.
- Realty Income Corp (O) is a real estate investment trust that owns and operates a portfolio of single-tenant retail properties. O is one of the most popular REITs among income investors, with a dividend yield of 4.4%.
- Crown Castle International Corp (CCI) is a real estate investment trust that owns and operates a portfolio of cell towers and other wireless infrastructure. CCI is similar to AMT in that it is a large and diversified REIT with a strong track record of dividend growth. Its dividend yield is currently at 3.2%.
- Simon Property Group Inc (SPG) is a real estate investment trust that owns and operates a portfolio of shopping malls. SPG is the largest shopping mall REIT in the world, with a market capitalization of over $100 billion. It has a dividend yield of 3.7%.
- Welltower Inc (WELL) is a real estate investment trust that owns and operates a portfolio of healthcare properties, including senior living facilities, hospitals, and medical office buildings. WELL is a defensive REIT well-positioned to benefit from the aging population. It has a dividend yield of 3.8%.
- Extra Space Storage Inc (EXR) is a self-storage REIT that owns and operates over 1,600 self-storage facilities in the United States. EXR is similar to PSA in that it is a defensive REIT with a strong track record of dividend growth. Its dividend yield is currently at 4.2%.
- AvalonBay Communities Inc (AVB) is a real estate investment trust that owns and operates a portfolio of apartment communities. AVB is a high-quality REIT with a strong earnings and dividend growth track record. Its dividend yield is currently at 3.1%.
- STAG Industrial Inc (STAG) is an industrial REIT that owns and operates a portfolio of industrial properties. STAG is a growth-oriented REIT well-positioned to benefit from the e-commerce boom. Its dividend yield is currently at 3.5%.
- Vanguard Real Estate ETF (VNQ) represents an amalgamation of real estate assets, VNQ provides investors with an avenue to diversify their portfolios by gaining exposure to the expansive and multifaceted real estate sector.
Are REITs the Wave of the Future?
REITs are rapidly becoming a popular way for investors to diversify into real estate.
They offer critical benefits to investors, like:
- Diversification: REITs offer diversification benefits that can help investors reduce risk. By investing in a REIT, you are essentially investing in a basket of real estate assets, which can help reduce your exposure to any property or market.
- Income: REITs can provide a steady stream of income for investors. Many REITs pay quarterly dividends, which can help supplement your income or provide a source of retirement income.
- Growth: REITs have the potential to grow over time. The value of real estate assets tends to appreciate over time, and REITs that own high-quality properties benefit from appreciation.
- Liquidity: REITs are relatively liquid investments, which means that you can easily buy and sell them without having to worry about illiquidity. This makes them a good option for investors who need to access their money quickly.
In addition to these benefits, REITs are also subject to certain regulations that can help to protect investors. For example, REITs are required to distribute at least 90% of their taxable income to shareholders, which helps to ensure that investors receive a steady stream of income.
Here are some specific ways in which REITs might be integral to investors moving forward:
- Inflation hedge: As inflation rises, the value of real estate tends to appreciate. This is because real estate is a tangible asset that is not subject to the same inflation pressures as other assets, such as stocks and bonds. REITs can therefore provide investors with a hedge against inflation.
- Retirement planning: REITs can be a good way to generate income during retirement. Many REITs pay higher dividends than those paid by stocks or bonds. This can help retirees to supplement their Social Security income and other sources of retirement income.
- Passive income: REITs can be a good way to generate passive income. Passive income is income you earn without actively working for it. REITs can provide this type of income by paying dividends to shareholders.
- Tax benefits: REITs offer certain tax benefits that can attract investors. For example, REIT dividends are generally taxed lower than ordinary income.
Overall, REITs can be a valuable asset class for investors of all ages and stages of life. They offer a number of benefits, including diversification, income, growth, liquidity, and inflation protection.
If you are considering investing in REITs, it is important to do your research and choose REITs that are well-managed and have a good track record of performance