Best REITs to Invest in 2023 (ETFs, Stocks, & Mutual Funds)

Do you want to know the best REITs for the future? With the law stating that REITs need to pay out 90 percent of their taxable income to shareholders, such stocks are a way for investors to get into real estate and earn some cash along the way.

So, if you want your money to work hard for you for years to come, you should know what the best REITs are and why they hold that position.

Top 11 Best REITs to Invest in 2023

1. Fundrise – Best REIT for Beginners
2. Armour Residential REIT – Best high dividend REIT
3. Vanguard Real Estate ETF – Best REIT ETF
4. Bluerock Residential Growth – Best REIT stock
5. Baron Real Estate Fund – Best REIT mutual fund
6. Prologis – Best REIT to buy and hold forever
7. Mid-American Apartment Companies – Best REIT for income investors
8. Life Storage – Best REIT for inflation hedge
9. American Tower Corp – Best recession-proof REIT
10. Realty Income – Best REIT for Roth IRA
11. Camden Property Trust – Fastest growing REIT

Methodology

To find the best REITs, we went through several factors that make good REITs stand out from the crowd. Solid financials, attractive and sustainable dividends and required fees all played a role in helping us find the best REITs.

Additionally, we looked at the history of each REIT to see how their operations played out over the years. Did the REIT find success even in difficult economic times?

Positive answers to such questions highlight solid leadership and a good investment strategy for the REIT, both of which are good signs for investors.

Fundrise – Best REIT for Beginners

Fundrise is a real estate crowdfunding REIT with a great track record that outperforms the stock market. Its assets hold up even during periods of economic slowdown due to a mix of fixed income and high volatility properties.

Specifically, Fundrise uses a combination of four different risk levels and investment types to combine high payouts and growth potential with a reliable foundation of properties.

This strategy has led to Fundrise holders seeing growth in their investment value and consistent dividend payouts despite the last year of downturn in the stock market.

Since you cannot buy Fundrise shares on the stock market, investors have to create a Fundrise account to join them.

The company’s general and retirement accounts have different minimum investment amounts, depending on what level of support you want from their management.

• Dividend yield: 4.99%
• Minimum investment: $10 to $100,000
• Types of investments: Various residential and office spaces
• Markets: United States
• Best for: Beginners to real estate investing

Armour Residential REIT (ARR) – Best High Dividend REIT

ARR is well known for its high REIT dividend, thanks to its investment in residential homes. Specifically, ARR invests in fixed-rate mortgage homes backed by a federal institution to ensure that its holdings stick around for years to come and generate revenue.

Armour, the company behind the REIT, began in 2008 during the height of the recession caused by poor real estate practices.

Many of Armour’s policies reflect this — the company goes out of its way to avoid high-risk properties that helped cause the recession 15 years ago.

Currently, ARR’s dividend comes about thanks to its broad range of properties and the small amount of overheads the company maintains, despite its diverse portfolio.

• Dividend yield: 22.22%
• Minimum investment: Depends on the broker
• Types of investments: High-quality residential homes
• Markets: United States
• Best for: High total returns for cash flow

Vanguard Real Estate ETF (VNQ) – Best REIT ETF

This exchange-traded fund (ETF) buys real estate stocks using an automated manager, improving year-to-year returns by removing the human element from big day-to-day decisions.

Vanguard itself is a well-known advisor group managing numerous ETFs and mutual funds.

Founded 47 years ago, the group was among the first to adopt the ETF concept, creating some of the most successful index funds that regular investors could purchase.

Today, Vanguard manages over $7 trillion in assets, with its real estate ETF containing roughly $22.6 billion in stocks related to real estate.

Thus, rather than giving investors direct ties to real estate, the fund gives them exposure to real estate through a broad range of companies relying on real estate for their revenue.

• Dividend yield: 3.75%
• Minimum investment: $1
• Types of investments: Real estate stocks
• Markets: United States
• Best for: Diversity in invested asset classes

Bluerock Residential Growth (BRG) – Best REIT Stock

While normally focusing on industrial properties, BRG is one of the few real estate companies pausing their dividends right now due to outside circumstances.

At the end of 2021, the REIT announced that Blackstone would acquire the company, causing the stock to come down from the stock market as the company became private.

This move allowed Blackstone to properly merge the holdings from Bluerock with its own.

Before this buyout, Bluerock maintained consistent share value growth over the previous 10 years, mostly due to the valuation growth for its industrial and residential properties.

While we don’t yet know how Blackstone will change things up, gaining access to Bluerock’s holdings should provide a solid foundation for Blackstone’s real estate holdings for years to come.

• Dividend yield: Currently inactive (was 2.52%)
• Minimum investment: $1
• Types of investments: Mostly industrial and residential
• Markets: United States
• Best for: Price stability

Baron Real Estate Fund (BREIX) – Best REIT Mutual Fund

Unlike the other top REITs, BREIX focuses on its share price over dividends thanks to being a mutual fund. Its holdings have a broad diversification across all real estate sectors.

The company first got its start in 1982, meaning that Baron Real Estate is familiar with real estate woes and recession.

This lifespan also gives the company a long-term mindset, leading to its focus on reinvestment and portfolio growth over massive dividend payouts.

In total, the fund manages $1.25 billion in properties, with most of its top holdings being shares of real estate companies.

• Dividend yield: None
• Minimum investment: $1
• Types of investments: Various
• Markets: United States and minor international holdings
• Best for: Commercial real estate exposure

Prologis (PLD) – Best REIT to Buy & Hold forever

PLD focuses on logistical industrial real estate, such as data centers. Founded out of San Francisco, the company offers plenty of growth potential thanks to booming technology and distribution sectors over the last decade.

The fund manages an astounding $165 billion in assets, including roughly 4,900 buildings. Each of these holdings is either wholly owned by Prologis or through co-investment ventures with other large REITs.

A major part of Prologis’s investment strategy is high-barrier assets. By focusing on properties that most others cannot afford, Prologis acts as a titan in its space, helping solidify its niche in the REIT market.

• Dividend yield: 2.61%
• Minimum investment: $1
• Types of investments: Logistical and industrial
• Markets: United States plus 18 other countries
• Best for: Long-term growth

Mid-American Apartment Companies (MAA) – Best REIT for Income Investors

Focusing on top-performing apartment complexes, MAA is a New York Stock Exchange (NYSE)-listed company investing in residential real estate.

Most of the company’s holdings exist in the Sun Belt region of the United States, which contains many areas that have seen massive development with the tech boom of the last decade, including Silicon Valley and the areas around Miami, Florida.

Overall, the company manages 278 properties in 16 states and Washington, D.C. MAA’s dividends have consistently gone out to investors since 1994, making this REIT great for those investing for passive income.

• Dividend yield: 3.41%
• Minimum investment: $1
• Types of investments: Apartment complexes
• Markets: United States
• Best for: Exposure to apartment buildings

Life Storage (LSI) – Best REIT for Inflation Hedge

This self-storage company is a dividend stock with great returns and operates like a REIT.

Over the last year, the stock price is down a smaller percentage than the rest of the stock market, making the REIT a good hedge against inflation and general downturns in the market.

For the most part, this is due to Life Storage’s unique position as a company. Rather than operating as a standard REIT, the company franchises self-storage facilities like a REIT.

Overall, this management, along with Life Storage’s utility as a company to the general population, helps keep the value of the stock up, even when macroeconomic forces pull things down.

• Dividend yield: 4.17%
• Minimum investment: $1
• Types of investments: Self-storage facilities
• Markets: United States
• Best for: Hedge against inflation

American Tower Corp (AMT) – Best Recession-Proof REIT

AMT focuses on high occupancy rates in the communications REIT sector. This focus on telecommunications helps prevent AMT from losing value due to recessions or economic downturns.

As technology continues to develop and boom, the world needs more bandwidth to allow for a continuous and seamless transfer of communication and data.

American Tower Corp invests in real estate related to communications in order to generate value for its holders as these communication companies expand and grow in value.

Given the importance of communication for modern society and the fact that communication hardware requires specialized interiors to maintain it, AMT has little to worry about with regard to temporary recessions pulling their properties down.

Additionally, the company invests in 20 countries across four continents. Thus, the company has four different large economies to help balance out its portfolio and combine both reliable income and growth potential in the coming years.

• Dividend yield: 3.02%
• Minimum investment: $1
• Types of investments: Telecommunication buildings
• Markets: Global
• Best for: Reliable real estate investments

Realty Income (O) – Best REIT for Roth IRA

One of the few REITs to offer a monthly dividend, Realty Income provides passive income that investors can use in a Roth IRA to grow its holdings through compound interest.

While Realty Income has some residential real estate holdings, its top holdings involve properties for retail ventures most people need, such as grocery stores, convenience stores, and health and fitness centers.

A majority of the company’s holdings are in the United States, but roughly nine percent of its portfolio includes properties in the United Kingdom.

Though there are differences between these two markets, the Western world shares many trends in its economies, especially recently, making this bit of diversification nice but not stellar.

Still, many of Realty’s properties are necessary for modern life, making them great for retirement accounts.

Realty Income does not appear to be going anywhere anytime soon, and the dividends it pays out are great for reinvesting.

• Dividend yield: 4.78%
• Minimum investment: $1
• Types of investments: Various real estate
• Markets: United States and the United Kingdom
• Best for: Cash flow for retirement accounts

Camden Property Trust (CPT) – Fastest Growing REIT

While some REITs focus on single-tenant homes, CPT prefers apartments. Its holdings have grown quickly in the last few years, leading CPT’s stock price to soar before the recent recession.

CPT maintains a total of 171 properties, totaling roughly $9.4 billion in valuation. Over the last 10 years, the stock price has nearly doubled, mostly off the back of CPT’s properties growing in value thanks to booms in housing prices and rent price rises.

This growth occurred despite the downturn in the last few years. This could be a sign that CPT will take off when market forces turn bullish.

Still, real estate has long been a valuable asset despite market forces, meaning that CPT will be around for a while, regardless.

• Dividend yield: 3.18%
• Minimum investment: $1
• Types of investments: Multifamily apartments
• Markets: United States
• Best for: Price growth

3 REIT Honorable Mentions

The above list of REITs and ETFs covers just a handful of the options out there. While we think they are the best choices going into 2023, here are some other REITs worth mentioning:

• Cardone Capital: Focuses on luxury apartment homes, predominantly in Florida.
• Open Door Capital: Focuses on mobile home parks, apartment complexes and other real estate geared toward multiple families.
• Ventas: Predominantly invests in medical office buildings and healthcare facilities.

REIT Investors Guide

While having a list of REITs to choose from is nice, many investors will want to dig deeper than a list of recommendations before they commit their hard-earned money.

Before investing in a REIT, there are some important factors you will want to look at that share some similarities with what an investor should look at for other companies.

However, we want to ensure that we touch on what makes these factors important for REITs.

Funds From Operation (FFO): Every REIT has a FFO describing how much revenue the REIT generates per year. In general, the more funds a REIT has available in revenue and other liquidity, the better the REIT can handle a bear market.

A higher FFO will also display how much liquidity a REIT has for reinvestment. Part of how REITs grow in value is by expanding their investment holdings, which require leftover funds to acquire.

A higher FFO will mean the REIT has a larger gross amount of money to reinvest into properties when the opportunity arises.

Balance sheet: Many REITs obtain properties by borrowing money. Checking a REIT’s revenue against its costs, such as debt repayments, will show you if the REIT can generate a profit in the long term.

Additionally, most balance sheets will carry a savings or runway listing. This value represents the savings and reserve cash the REIT maintains to weather down periods.

A larger number here shows that the REIT values protection against rainy days and has long-term projections in mind.

Dividends: Many investors buy into REITs due to their dividends. Checking that a dividend is not only high but also sensible for the revenue the REIT earns helps ensure you don’t lose your money to the REIT going bankrupt.

As mentioned earlier, REITs have to pay out at least 90 percent of their revenue as dividends to holders. This requirement means the REIT will have to operate on 10 percent of its revenue.

So, investors should keep an eye out for consistent dividend payouts with no or few decreases. Such drop-offs can represent management or property troubles.

Real estate portfolio: Finally, not all REITs buy into general housing. Some organizations focus on a sector of real estate, such as healthcare buildings or office spaces.

Investing in a REIT that focuses on something you are familiar with can help the investment feel important. On top of what properties a REIT invests in, you also want to look at occupancy rates, where appropriate.

Just because a REIT manages an apartment complex doesn’t mean that each unit has a tenant paying rent. Thus, you’ll want to see high average occupancy for a REIT’s portfolio to ensure they can maintain their revenue flow.

How to Pick The Right REIT

The best REIT for you is one that invests in a type of real estate you understand and maintains a healthy balance sheet over the long run.

It’s important to understand what you’re investing in so that you know what you’re committing your money toward. With understanding comes confidence and a greater chance your investment will have success.

Also, REITs work best for investors when their quarterly dividend payout is something they understand and will be around for years to come. This means you have even more incentive to understand what you invest in.

Investments are long-term plays, compared to the short-term mindset traders make on commodities and paper assets. If you look at real estate, even through a REIT, expect to make long-term plans.

Which REIT is Best for You?

The best REIT for you will be one that matches your goals as an investor and has financials that look solid for years to come. Review the investing factors from earlier, regardless of which REIT caught your eye.

Having those tools can prevent heartbreak in the future. So, we recommend looking at the websites and financials for each REIT above, as well as any others you wish to invest with.

The more information you gather for yourself, the better your chances of making a solid investment.

FAQs

Here are answers to some of the most common REIT questions.