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. Instead, you 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 nine of the best REITs to buy in 2024, according to Morningstar analysts:
| REIT Stock | Forward dividend yield |
| American Tower Corp. (ticker: AMT) | 3.2% |
| Public Storage (PSA) | 4.3% |
| Realty Income Corp. (O) | 5.7% |
| Crown Castle Inc. (CCI) | 6% |
| Extra Space Storage Inc. (EXR) | 4.4% |
| Equity Residential Properties Trust (EQR) | 4.1% |
| Weyerhaeuser Co. (WY) | 2.7% |
| Invitation Homes Inc. (INVH) | 3.2% |
| SBA Communications Corp. (SBAC) | 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 Matthew Dolgin says American Tower is well positioned to benefit from secular, global growth in mobile data demand, and the company’s strategy to diversify its tower assets internationally will help it capture more of that growth than its American peers. Dolgin says the company’s solid first-quarter financial numbers were particularly impressive given the difficult environment for tower providers. He expects market conditions will improve in coming quarters. Morningstar has a “buy” rating and $215 fair value estimate for AMT stock, which closed at $200.41 on June 4.
Public Storage is the largest owner of self-storage facilities in the U.S. Analyst Suryansh Sharma says muted demand for self-storage units has weighed on rental rates in many markets in 2024. However, Sharma says the current demand slowdown is relatively mild, and the company anticipates a slow recovery throughout the remainder of the year. In addition to its storage business, Sharma says Public Storage has a lucrative insurance business. The self-storage industry is also recession resistant, reducing risk in the event of an economic downturn. Morningstar has a “buy” rating and $310 fair value estimate for PSA stock, which closed at $278.97 on June 4.
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 5.7% dividend yield and makes monthly dividend payments, making it an attractive income source. Analyst Kevin Brown says Realty Income has been acquiring properties in Europe at a higher capitalization rate than its U.S. acquisitions. Morningstar has a “buy” rating and $76 fair value estimate for O stock, which closed at $54.43 on June 4.
Crown Castle is a specialty REIT that owns and operates wireless communications towers. Crown Castle has a 6% dividend, the highest of any stock on this list. Dolgin says mobile carrier investment in towers has been muted, and small-cell revenue growth has accelerated. However, he is bullish on Crown Castle’s new CEO and sees the company’s fiber segment as a win-win for investors regardless of whether or not the company decides to sell all or part of its fiber business. Morningstar has a “buy” rating and $130 fair value estimate for CCI stock, which closed at $103.62 on June 4.
Extra Space Storage Inc. (EXR)
Extra Space Storage is one of the largest publicly traded self-storage REITs. Sharma says self storage demand growth will likely remain muted in the next several years, but Extra Space management has done an excellent job maintaining high occupancy rates in the difficult demand environment. The company’s same-store occupancy rate of 93.3% as of the end of the first quarter is up 80 basis points sequentially and 60 basis points from a year ago. Sharma says Extra Space will likely continue to gain market share from smaller competitors. Morningstar has a “buy” rating and $160 fair value estimate for EXR stock, which closed at $148.06 on June 4.
Equity Residential Properties Trust (EQR)
Equity Residential is a multifamily residential REIT that owns and operates a diversified portfolio of apartment properties. Including dividends, the stock is up 8.4% this year through June 4, the best performance of any REIT on this list. Equity Residential reported a same-store occupancy rate of 96.3% in the first quarter, and that rate increased to 96.4% in April. Brown says the second quarter typically generates the highest percentage of lease renewals, suggesting Equity Residential’s positive momentum could continue and the company could exceed 2.6% rate growth in 2024. Morningstar has a “buy” rating and $79 fair value estimate for EQR stock, which closed at $65.61 on June 4.
Weyerhaeuser is a specialty REIT that grows timber and produces and sells forest products and pulp. Analyst Spencer Liberman says Weyerhaeuser’s export demand has softened, particularly in China. In addition, a stagnant housing market and a weak repair and remodeling environment in North America have been headwinds, but Liberman says wood product demand and pricing have held up relatively well. He projects growth in both single-family housing starts and repair and remodel markets in 2024, which should drive demand for both engineered wood products and lumber. Morningstar has a “buy” rating and $35 fair value estimate for WY stock, which closed at $29.47 on June 4.
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 Homes is rapidly growing its property management business in 2024 after launching asset and property management services for third-party rental homes in January. The management business initially included a portfolio of more than 14,200 homes, but Invitation has since added at least 7,400 additional homes. Brown is bullish on this expansion into property management, which he says will provide a steady stream of supplemental income. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $34.95 on June 4.
SBA Communications Corp. (SBAC)
SBA Communications is a specialized REIT that owns and operates a global wireless communications tower network. The stock is down 21% this year, the worst performance of any stock on this list. Dolgin says SBA will continue to deal with a lull in carrier investment throughout 2024. However, he says SBA is taking advantage of its share price weakness by buying back stock and bringing down debt. Net debt is now down to just 6.3 times earnings before interest, taxes, depreciation and amortization. Morningstar has a “buy” rating and $250 fair value estimate for SBAC stock, which closed at $198.63 on June 4.
