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. 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 nine of the best REITs to buy in 2024, according to Morningstar analysts:
| REIT stock | Implied upside (over Feb. 2 close) |
| Welltower Inc. (ticker: WELL) | 17.1% |
| Crown Castle Inc. (CCI) | 20% |
| Realty Income Corp. (O) | 40.2% |
| AvalonBay Communities Inc. (AVB) | 33.1% |
| SBA Communications Corp. (SBAC) | 15.7% |
| Equity Residential Properties Trust (EQR) | 44.6% |
| Boston Properties Inc. (BXP) | 49.2% |
| Invitation Homes Inc. (INVH) | 24.2% |
| Ventas Inc. (VTR) | 55.3% |
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 more than 18% in the past 12 months, the best performance of any stock on this list. Welltower closed $1.4 billion in acquisitions in the third quarter. Analyst Kevin Brown says the Affordable Care Act has been a tremendous tailwind for Welltower and other top health care real estate owners, given the best health care systems continue to funnel patients their way. Morningstar has a “buy” rating and $103 fair value estimate for WELL stock, which closed at $87.93 on Feb. 2.
Crown Castle Inc. is a specialty REIT that owns and operates wireless communications towers. Crown Castle shares are down more than 33% in the past year, the worst performance of any stock on this list. Analyst Matthew Dolgin says the factors that weighed on the stock in 2023 include activist pressure to divest the company’s underperforming fiber business, a slowdown in wireless carrier spending, concerns over liquidity and a possible dividend cut. However, Dolgin says fears about the business are overblown and the dividend is safe. Morningstar has a “buy” rating and $130 fair value estimate for CCI stock, which closed at $108.32 on Feb. 2.
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. Brown says Realty’s retail clients are high-quality companies that are service-oriented, insulated from e-commerce competition or resistant to economic downturns. Morningstar has a “buy” rating and $76 fair value estimate for O stock, which closed at $54.19 on Feb. 2.
AvalonBay Communities Inc. (AVB)
AvalonBay Communities is a multifamily residential REIT that specializes in upscale apartment communities. Brown says supply growth will weigh on AvalonBay’s rent and net operating income (NOI) in 2024, but 4.9% job growth and income growth in the company’s established markets will help support demand. Brown says the slower-growth outlook for 2024 does not impact his bullish long-term outlook for AvalonBay, and he projects the company will still generate same-store NOI growth about 1% above the inflation rate even in a difficult environment this year. Morningstar has a “buy” rating and $233 fair value estimate for AVB stock, which closed at $175.06 on Feb. 2.
SBA Communications Corp. (SBAC)
SBA Communications is a specialized REIT that owns and operates a global wireless communications tower network. Dolgin says SBA is well positioned in the U.S. market and has opportunities to accelerate its growth in international markets in 2024 and beyond. In fact, Dolgin says the company should abandon its risky strategy of leveraging up to fund stock buybacks and instead focus on opportunities to expand deeper into developing markets. Nevertheless, Dolgin says SBA will continue to grow its business at an impressive pace. Morningstar has a “buy” rating and $260 fair value estimate for SBAC stock, which closed at $224.71 on Feb. 2.
Equity Residential Properties Trust (EQR)
Equity Residential is a multifamily residential REIT that owns and operates a diversified portfolio of apartment properties. Brown says Equity’s growth rate will likely slow in coming quarters given the company recently guided for 2024 same-store revenue growth of between 2% and 3% and same-store NOI growth of between 1% and 2.6%. However, Brown says the company’s high-quality property portfolio focused on multifamily buildings in urban, coastal markets like Los Angeles and San Diego will continue to create value for investors in the long term. Morningstar has a “buy” rating and $87 fair value estimate for EQR stock, which closed at $60.17 on Feb. 2.
Boston Properties Inc. (BXP)
Boston Properties is an office REIT that owns office buildings in Boston, New York City, Los Angeles, San Francisco and Washington, D.C. The stock has a 6% dividend yield, highest on this list. Analyst Suryansh Sharma says Boston Properties’ initial 2024 guidance for a 2.5% decline in funds from operation this year was mostly in line with his expectations. Sharma says Boston Properties has a sound strategy of owning and developing top-tier properties that maintain high occupancy rates and premium rental rates even during economic downturns. Morningstar has a “buy” rating and $95 fair value estimate for BXP stock, which closed at $63.69 on Feb. 2.
Invitation Homes Inc. (INVH)
Invitation Homes owns, operates and leases single-family U.S. homes in the starter and move-up categories. Brown forecasts 3% growth in single-family housing starts in 2024, with a decline of 24% this year in multifamily housing starts. He says the cost of renting in Invitation Homes’ core markets is lower than the cost of homeownership, a dynamic that supports high occupancy and allows for steady rent growth. In addition, Brown says Invitation Homes can control costs and boost margins by hiring its own maintenance and repair technicians. Morningstar has a “buy” rating and $41 fair value estimate for INVH stock, which closed at $33.02 on Feb. 2.
Ventas is a health care REIT that specializes in health care facilities, including specialty care facilities, housing for seniors, medical office buildings and hospitals. Brown says Ventas reported an impressive 1.3% sequential same-store occupancy gain in its senior housing portfolio in the most recent quarter. Total company same-store NOI growth of 7.9% also exceeded his expectations. Brown says demand growth will outpace supply growth in the next several quarters, and Ventas is on track to return to 2019 occupancy levels by 2025. Morningstar has a “buy” rating and $72 fair value estimate for VTR stock, which closed at $46.36 on Feb. 2.
