Best REITs To Watch or Invest In Right Now
Written by
Virginia Anderson
Edited by
Joe Evans
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Real estate investment trusts, or REITs, give investors a way to earn income from real estate without buying, managing or financing properties themselves. REITs own or finance income-producing assets like apartments, warehouses, data centers and medical facilities, then pass much of that income to shareholders as dividends.
Because REITs are required to distribute most of their taxable income, they are often used by investors seeking steady income and diversification.
Still, REITs are sensitive to interest rates, property demand and economic cycles, so understanding what type of real estate a REIT owns matters just as much as the dividend yield.
At A Glance: Best REITs
Company Ticker Property Focus Risk Profile/Use Case One-Line Reason It Stands Out Realty Income O Retail net lease Income-focused Monthly dividends backed by long leases Prologis PLD Industrial logistics Growth + income Global warehouse demand tied to e-commerce American Tower AMT Cell towers Growth-oriented REIT Infrastructure-like cash flow Public Storage PSA Self-storage Defensive income Pricing power in short-term leases Digital Realty Trust DLR Data centers Higher growth, higher volatility Cloud and AI infrastructure exposure Welltower WELL Health care real estate Income + demographics Senior housing and medical properties
What Is a REIT?
A REIT is a company that owns, operates or finances income-producing real estate. Under U.S. law, REITs must pay out at least 90% of taxable income to shareholders, which is why they are known for higher dividend yields.
REIT shares trade on major stock exchanges, making them far more liquid than owning physical property.
Why Investors Use REITs
REITs can play two important roles in a portfolio:
- Income: Many REITs offer higher dividend yields than the broader stock market.
- Diversification: Real estate often behaves differently from traditional stocks and bonds.
According to Nareit, U.S. REITs have historically delivered competitive long-term returns while providing income and diversification benefits.
Best REITs To Consider
Realty Income (O)
Realty Income is known as “The Monthly Dividend Company” because it pays dividends every month. According to company filings, its properties are leased under long-term net leases, meaning tenants pay most operating expenses. Retail concentration and tenant health are key risks to monitor.
Prologis (PLD)
Prologis owns and operates logistics and warehouse facilities around the world. Company disclosures show demand driven by e-commerce and supply-chain modernization. Growth potential is balanced by sensitivity to global trade and economic slowdowns.
American Tower (AMT)
American Tower owns cell towers and communications infrastructure, leasing space to wireless carriers. According to filings, long-term contracts and recurring revenue support cash flow. Exposure to interest rates and international markets adds complexity.
Public Storage (PSA)
Public Storage operates self-storage facilities across the U.S. and internationally. Short lease durations allow the company to adjust pricing quickly, which can be an advantage during inflationary periods. Demand tends to be more defensive than other property types.
Digital Realty Trust (DLR)
Digital Realty owns data centers that support cloud computing and digital infrastructure. According to company disclosures, revenue growth is tied to enterprise and hyperscale demand. High capital spending and energy costs can affect margins.
Welltower (WELL)
Welltower focuses on senior housing, medical offices and health care facilities. Demographic trends support long-term demand, but operating performance can fluctuate with labor costs and occupancy levels.
REITs vs. Owning Physical Real Estate
| Feature | REITs | Physical Real Estate |
|---|---|---|
| Liquidity | High | Low |
| Management | Professional | Owner-managed |
| Income | Regular dividends | Rent dependent |
| Capital Required | Low | High |
| Volatility | Market-driven | Local market-driven |
The Federal Reserve Bank of St. Louis notes that real estate prices and REIT prices can respond differently to interest-rate changes and economic conditions.
Risks of Investing in REITs
REITs are sensitive to interest rates because higher rates can increase borrowing costs and reduce property values. The Federal Reserve has highlighted that rising rates can pressure income-oriented assets, including REITs.
Other risks include property oversupply, tenant defaults and sector-specific downturns.
How REITs Fit Into a Portfolio
Many investors use REITs as an income and diversification allocation alongside stocks and bonds. Vanguard research suggests that modest real estate exposure can improve portfolio diversification, though overexposure can increase volatility.
Final Take to GO
REITs offer a convenient way to earn income from real estate while maintaining liquidity and diversification. Names like Realty Income and Prologis provide stable cash flow, while data center and health care REITs offer growth potential tied to long-term trends.
For most investors, REITs work best as a supporting income component, not a standalone investment strategy.
Best REITs FAQ
- What is a REIT?
- A REIT is a company that owns or finances income-producing real estate and pays most of its income to shareholders.
- Do REITs pay dividends?
- Yes, most REITs pay regular dividends because they are required to distribute the majority of taxable income.
- Are REITs risky?
- REITs carry market and interest-rate risk, and performance varies by property type and economic conditions.
- Are REIT dividends taxed differently?
- REIT dividends are often taxed as ordinary income, though some portions may receive different tax treatment.
- How much of a portfolio should be in REITs?
- Many investors keep REIT allocations moderate to balance income, diversification and volatility.
Dawn Allcot contributed to the reporting for this article.
Data is accurate as of Jan. 26, 2026, and is subject to change.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
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- Federal Bank of St. Louis "Real Estate Realities: Perspectives on the Housing Market"
- Morningstar "The Role of Real Estate Investments in a Portfolio"
- U.S. Federal Reserve "Nov. 2025 Financial Stability Report"
- Dividend.com "In Spite of the 90% Rule, Why Do Some REITs Have Poor Payout Ratios?"
- Nareit "Looking for Income? REITs Deliver"
- U.S. SEC "Investor Bulletin: REITs"
- Realty Income "Realty Income Form 10-K, SEC EDGAR"
- Prologis "Prologis Form 10-K, SEC EDGAR"
- American Tower "American Tower Form 10-K, SEC EDGAR"
- Public Storage "Public Storage Form 10-K, SEC EDGAR"
- Digital Realty "Digital Realty Form 10-K, SEC EDGAR"
- Welltower "Welltower Form 10-K, SEC EDGAR"
