Real estate can be an effective way for investors to hedge against inflation and potentially generate big returns. Buying physical property can be difficult and expensive for individual investors, but those investors can easily invest in real estate by buying shares of real estate investment trusts, or REITs. There are several different types of REITs, and many of them pay sizable dividends. In addition to REITs, the real estate sector includes management and development stocks that may not actually own properties.
Here are eight of the best real estate stocks to buy in 2024, according to CFRA Research analysts:
Prologis is an industrial REIT that specializes in logistics real estate. Analyst Michael Elliott says there is strong demand for Prologis’ strategically located logistics centers, and zoning laws limit competition in many of these areas. Elliott estimates Prologis’ current land portfolio can create roughly $40 billion in value, differentiating the REIT from competitors. He says concerns about slowing e-commerce growth are overblown, especially given that e-commerce providers need additional industrial space just to meet current demand. Elliott projects 10% to 12% revenue growth in 2024. CFRA has a “buy” rating and $156 price target for PLD stock, which closed at $132.40 on Dec. 22.
American Tower Corp. (AMT)
American Tower is a specialized REIT that operates the world’s largest independent portfolio of wireless communications and broadcast towers. Elliott says 2024 recession risks are already priced into American Tower at its current valuation, creating room for upside if the economy remains strong. He says mobile video growth, mid-spectrum 5G band buildouts and unlimited data plans will be long-term demand drivers for American Tower. International markets may be the biggest opportunity for the company moving forward, as even 4G penetration remains low in many parts of the world. CFRA has a “buy” rating and $239 price target for AMT stock, which closed at $215.19 on Dec. 22.
Equinix is a specialized REIT and is the world’s largest data center operator. Elliott says Equinix has a unique opportunity to scale its business globally given limited competition and constrained data center supply. He says site expansions create growth opportunities, and the company’s highly recurring revenue base generates exactly the type of highly visible financial outlook that income investors love. Equinix is also the data center partner of choice for many of the world’s largest tech companies. Elliott projects 8% to 10% revenue growth in 2024. CFRA has a “buy” rating and $895 price target for EQIX stock, which closed at $799.68 on Dec. 22.
Public Storage is the largest owner of self-storage facilities in the U.S. Elliott says Public Storage has a diversified, high-quality portfolio of self-storage facilities. In addition to organic growth opportunities, the company is expanding via acquisitions. Public Storage acquired Simply Self Storage for $2.2 billion in September 2023 in a deal Elliott says will help Public Storage improve the quality and breadth of its portfolio. He says Public Storage has a healthy balance sheet, and he projects 5% to 7% revenue growth in 2024. CFRA has a “buy” rating and $333 price target for PSA stock, which closed at $297.93 on Dec. 22.
Welltower is a health care REIT that invests in health care facilities, including senior housing, specialty care facilities and medical office buildings. The REIT is up 41.5% through Dec. 22 this year, the best 2023 performance of any stock on this list. Elliott says senior housing markets continue to improve following the COVID-19 pandemic, and he expects that trend to remain in place for at least the next 12 months. He says occupancy rates are rising and Welltower’s pricing power is improving. An aging U.S. population will also support long-term demand. CFRA has a “buy” rating and $100 price target for WELL stock, which closed at $89.96 on Dec. 22.
CoStar is a real estate services company that operates online real estate marketplaces and provides research for the commercial real estate industry. Elliott says CoStar has built an impressive and resilient business model that can succeed throughout the cyclical ups and downs of the real estate market. He says Homes.com has exceeded growth expectations, including reporting 100 million unique users in September 2023. Elliott says CoStar will begin to monetize Homes.com in early 2024, boosting its overall margins. He projects 14% revenue growth in 2024. CFRA has a “buy” rating and $94 price target for CSGP stock, which closed at $87.47 on Dec. 22.
Vici Properties Inc. (VICI)
Vici Properties is a specialized REIT that owns gaming, hospitality and entertainment properties, including Caesar’s Palace in Las Vegas. Vici has been aggressively acquiring major properties, including the acquisition of the remaining 49.9% interest in the MGM Grand Las Vegas and Mandalay Bay Resort from Blackstone Real Estate Income Trust for $1.27 billion in January 2023. VICI shares pay a 5.3% dividend, the highest yield of any stock on this list. Elliott says VICI owns best-in-class gaming properties that will create significant value for investors. CFRA has a “buy” rating and $33 price target for VICI stock, which closed at $31.34 on Dec. 22.
Alexandria Real Estate Equities Inc. (ARE)
Alexandria Real Estate Equities owns properties containing office and laboratory space for the life sciences industry. Shares are down 9.3% through Dec. 22 this year, making it the worst-performing stock on this list. Elliott says Alexandria is the market leader in life science real estate, which will continue to see strong demand thanks to an aging U.S. population and ongoing investment in new drug development. This specialized real estate is also less prone to cyclical economic downturns, and Elliott says the company’s diversified mix of tenants reduces risk. CFRA has a “strong buy” rating and $156 price target for ARE stock, which closed at $127.75 on Dec. 22.
