Real estate investment trusts are excellent options for individuals who want investment exposure in the real estate market but don’t have the funds to buy multiple properties themselves. REITs are companies that own a portfolio of properties, including apartment complexes, commercial real estate, shopping malls and other assets. Purchasing shares in a REIT allows you to benefit from the returns it earns without the headache of actual property ownership.
6 Best REITs for 2023
Here’s a look at six of the best REITs to consider for 2023.
1. Prologis Inc. (PLD)
Prologis Inc. primarily buys distribution and fulfillment centers. Founded in 1983, the company has a portfolio of properties with over 1.2 billion square feet and counts Amazon, FedEx and DHL among its top ten customers. It holds real estate throughout the U.S., Canada, Brazil, Europe and Asia.
Prologis Inc.’s current market cap sits at $113 billion. It has a forward-looking dividend compound annual growth rate of 14% for the next three years and 12% over the next five. In the first quarter of 2023, the company declared a $0.87 dividend for common stock and $1.0675 for preferred shares.
2. Mid-America Apartment Communities (MAA)
Mid-America Apartment Communities is an S&P 500 real estate investment trust. Its portfolio primarily consists of apartment complexes located throughout the Sunbelt region. Mid-America Apartment Communities has a long history of issuing dividends. Since 1994, the company has never missed a dividend payout.
Currently, the company owns over 100,000 apartment homes in sixteen states and Washington, D.C. The company issued a $1.40 dividend for the first quarter of 2023. Over the past ten years, the average dividend growth for Mid-America Apartment Communities was 5.9%.
3. W.P. Carey (WPC)
People looking for a diverse REIT will likely find W.P. Carey attractive. Founded 50 years ago, the company holds 84 self-storage centers and nearly 1,500 net-lease properties totaling over 176 million square feet. Its portfolio contains multiple single-tenant, warehouse, retail and industrial properties.
W.P. Carey has a long history of issuing dividends. Since 1998, it’s never missed a payout to its shareholders. Target yearly dividends for 2023 are between $5.30 and $5.40 per share. A few of W.P. Carey’s top ten customers include U-Haul, Metro and Hellweg.
4. Federal Realty (FRT)
First established in 1962, Federal Realty is one of the oldest REITs in the U.S. Many of the assets Federal Realty owns include shopping centers, strip malls and upscale mix-used properties. A few of Federal Realty’s top ten tenants include CVS, Home Depot, Gap and Albertsons.
While it has a smaller portfolio, it focuses on operational efficiency. This is why it has the longest record of annual dividend increases among all the U.S. REITs. Federal Realty’s average dividend growth over the past 55 years is 7%.
5. American Tower (AMT)
American Tower is one of the world’s largest REITs. Its portfolio consists primarily of multitenant communications real estate. The company owns nearly 226,000 sites throughout the U.S., Canada and 24 other countries across six continents.
American Tower boasts a high annual dividend per share growth of over 20% since 2012. In the first quarter of 2023, the company declared a dividend of $1.56 for common share stockholders.
6. Blackstone Mortgage Trust (BXMT)
Blackstone Mortgage Trust holds extensive loans on various properties, including multifamily apartments and commercial offices. Its sponsor, Blackstone, is the largest alternative asset manager in the world. Blackstone Mortgage Trust holds mortgages on properties throughout the U.S., Europe and Australia.
Over the past 31 consecutive quarters, Blackstone Mortgage Trust issued dividends of $0.62. According to their most recent financial results, the company has a 14.7% dividend yield. This makes Blackstone Mortgage Trust attractive to investors who are seeking stable dividends.
What REITs Are Best To Invest In?
Choosing the best REIT to invest in comes down to your personal objectives. Investors often use REITs to complement their traditional equity portfolios. This allows them to diversify their assets across different classes. You can select REITs based on their dividend history or look for REITs with solid potential for future growth. REITs, especially those that issue regular dividends, can be a great source of passive income.
Investing in REITs is an excellent alternative for individuals seeking regular passive income or those who want exposure to real estate assets without needing to buy them outright. Many REITs specialize in specific real estate types. Investors should understand the company’s investment strategy and portfolio components before picking one that suits their criteria. While some REITs are highly reliable, they’re not completely risk-free. Make sure you do your research and only invest what you can afford.
FAQHere are the answers to some of the most frequently asked questions regarding REITs.
- Which REIT has the best returns?
- There are no guarantees that a REIT will issue a dividend next quarter, even if it has a lengthy history of declaring one. Share prices of REITs can be volatile, so even if the REIT pays a dividend, you may find that the value of your investment changes. That said, American Tower currently has some of the highest dividends among all the U.S. REITs.
- What are the top five largest REITs?
- REITs with the highest market cap include Prologis, American Tower, Equinix, Public Storage and Crown Castle. All five are U.S. REITs.
- Are REITs a good investment right now?
- Most investors purchase REITs to diversify their portfolios and earn passive income through dividends. They're a great way to create cash flow from your investments that you may not make through other assets. If you're seeking security amid a bear market, look for REITs with a strong dividend history to minimize risk.
Dawn Allcot contributed to the reporting for this article.
Data is accurate as of May 30, 2023, and is subject to change.
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