In this article, we discuss 10 best REIT ETFs to buy now.
Over the years, exchange-traded funds (ETFs) have seen a steady rise popularity, as they offer lower operational costs to investors as compared with traditional funds. In 2021, approximately 445 ETFs were launched, with total assets of $1 trillion, as reported by Financial Times.
In the ETF world, investors are flocking to REIT ETFs thanks to their steady dividend returns and growth prospects. This trend is gaining pace especially after a huge spike in inflation. In 2021, the real estate sector bounced back from its pandemic-related lows, as global real estate markets returned 27.2%, according to a report by Morgan Stanley.
On the other hand, growth ETFs which often track tech stocks like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) are down in 2022 amid a broader sell-off.
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Our Methodology:
In this article, we discuss the best REIT ETFs to buy now. The ETFs mentioned in the list invest mainly in real estate investment trusts to offer full exposure to the real estate sector to investors. The major holdings of the ETFs are also mentioned to provide an in-depth analysis of these funds.
Best REIT ETFs to Buy Now
10. JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE)
JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE) is a passively managed REIT ETF that tracks small, mid, and large-cap companies that are involved in the ownership and management of US real estate. As of June, the fund holds 139 stocks, with the top 10 holdings representing roughly 40% of the portfolio. The fund’s total assets amount to over $1.32 billion.
Realty Income Corporation (NYSE:O) is the fourth-largest holding of JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE), accounting for 3.58% of the fund’s portfolio. In Q1 2022, the company reported solid quarterly results, posting an FFO of $0.98, which beat estimates by $0.01. Moreover, its revenue of $807 million also exceeded the market consensus by $58.6 million. Realty Income Corporation (NYSE:O) currently offers a monthly dividend of $0.247 per share, with a dividend yield of 4.49%, as of the close of June 13.
As per Insider Monkey’s Q1 2022 database, 22 hedge funds owned stakes in Realty Income Corporation (NYSE:O), compared with 30 funds in the previous quarter. The collective value of these stakes is over $284.8 million. Among these hedge funds, Glendon Capital Management held the largest stake in the company in Q1, worth $128.6 million.
As major stocks, such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) are falling in 2022 due to the pressure on the tech sector, some real estate stocks, such as Realty Income Corporation (NYSE:O) also generated negative returns for shareholders, having lost 11.2% of its value in 2022 so far.
9. Global X SuperDividend REIT ETF (NASDAQ:SRET)
Global X SuperDividend REIT ETF (NASDAQ:SRET) invests in some of the highest yielding REITs globally. The fund invests internationally, but over 55% of its net assets are in the US. Mortgage REITs take up the major portion of the fund, representing 38.87% of its portfolio. As of June 2022, the fund has total net assets of over $345 million. Moreover, the fund has given monthly dividends to shareholders consecutively for the past 7 years.
Physicians Realty Trust (NYSE:DOC) is one of the major holdings of Global X SuperDividend REIT ETF (NASDAQ:SRET), representing 4.00% of the fund’s portfolio. In April, Barclays initiated its coverage of the stock with an Overweight rating and a $20 price target, highlighting the company’s stable business model. The company’s Q1 results also showed its strength as it generated $130.3 million in revenue, up 15% from the prior-year quarter. Moreover, Physicians Realty Trust (NYSE:DOC) also pays a quarterly dividend of $0.23 per share, with an attractive dividend yield of 5.31%.
At the end of March 2022, 14 hedge funds tracked by Insider Monkey reported owning stakes in Physicians Realty Trust (NYSE:DOC), down from 18 in the previous quarter. The collective value of these stakes is over $91.5 million.
8. Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY)
Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY) tracks the performance of the KBW NASDAQ Premium Yield Equity REIT Index. The fund generally invests at least 90% of its total assets in small and mid-cap equity REITs that offer competitive dividend yields. Currently, the fund holds 28 stocks, with a total expense ratio of 0.35%. On May 23, Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY) announced a monthly distribution of $0.1123 per share, with a yield of 5.94%, as of the close of June 13.
A notable stock in Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY)’s portfolio is EPR Properties (NYSE:EPR), a Missouri-based real estate investment trust that invests in entertainment properties. The company recently expanded its operations in Canada, acquiring two properties in the country worth $142 million. Its Q1 2022 earnings report showed post-pandemic recovery due to healthy tenant performance. EPR Properties (NYSE:EPR) reported revenue of $157.4 million in the first quarter, beating estimates by $11.9 million.
On May 16, EPR Properties (NYSE:EPR) announced a quarterly dividend of $.275 per share, in line with its previous dividend. As of June 13, the stock’s dividend yield came to be recorded at 7.19%.
Insider Monkey’s Q1 2022 database showed a spike in the hedge fund interest in EPR Properties (NYSE:EPR), as 25 funds owned stakes in the company, up from 22 a quarter earlier. The consolidated value of these stakes is over $225.5 million. Israel Englander’s Millennium Management was the company’s leading shareholder in the first quarter, owning stakes worth $42.5 million.
7. Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE)
Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE) tracks the performance of the US real estate equities selected from the S&P 500. The fund and the index are rebalanced quarterly to check the accurate representation of its underlying stocks. As of June, Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE)’s portfolio contains 32 stocks. The top 10 holdings represent 36.4% of the portfolio and the fund’s total expense ratio stands at 0.40%. On March 21, the fund announced a quarterly dividend of $0.3257, up 52% from the previous dividend.
American Tower Corporation (NYSE:AMT) is the largest holding of Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE), which mainly invests in wireless and broadcast communications infrastructure. In Q1 2022, the company showed growth in its total revenue and property revenue by 23.2% and 22.1%, respectively. Moreover, its net income also increased by 7.7% to $703 million.
On June 6, BofA initiated its coverage of American Tower Corporation (NYSE:AMT) with a Buy rating and a $315 price target. The firm appreciated the company’s non-binding agreement in its data center business, valued at over $2.5 billion. In May, the company also announced a 2% increase in its quarterly dividend to $1.43 per share, with a dividend yield of 2.37%, as of the close of June 13.
As per Insider Monkey’s Q1 2022 database, 50 hedge funds tracked by Insider Monkey owned stakes in American Tower Corporation (NYSE:AMT), down from 53 in the previous quarter. The consolidated value of these stakes is over $4.1 billion.
Qualivian Investment Partners mentioned American Tower Corporation (NYSE:AMT) in its Q3 2021 investor letter. Here is what the firm has to say:
“What Attracts Us
Superior Business:
• High barriers to entry resulting from low bargaining power of suppliers (land owners) and customers (wireless companies). Neither can find reasonable substitutes for existing cell towers. Combined with low possibility of disruption, this results in a business oligopoly and pricing power.
• Stable business with consistent high returns on equity, low maintenance capital required, and strong cash generation.
− Ten-year, non-cancelable contracts with built in pricing escalators and high renewal rates
− 1%-2% churnSuperior Reinvestment Opportunities:
• Strong growth for the foreseeable future due to increasing demand for wireless data usage, resulting in wireless carriers Capex equipment spend on existing and new towers.
• Low maintenance capital expenditure requirements; most of capital expenditure is for growthSuperior Management / Capital Allocation:
• Capital reinvested back in business has had returns well above cost of capital
• Company has purchased stock opportunistically…” (Click here to see the full text)
6. Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE:SRVR)
Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE:SRVR) is a strategy-driven ETF that invests in infrastructure and data REITs. The fund aims to provide exposure to the investors in the global developed markets that generate their revenues from the real estate sector. As of June, the fund has 24 securities in its portfolio, with net assets of over $1.2 billion. The top 10 holdings account for 78.7% of the fund’s portfolio.
A California-based REIT, Equinix, Inc. (NASDAQ:EQIX) is the third-largest holding of the fund. It invests in data centers and recently announced the acquisition of four data centers in Chile while agreeing to acquire one additional data center in Peru. In February, the company announced an 8% hike in its quarterly dividend to $3.10 per share, with a yield of 1.99%, as of June 13. In Q1 2022, Equinix, Inc. (NASDAQ:EQIX) posted revenue of $1.7 billion, up 6.3% from the same period last year. Moreover, its FFO of $7.16 beat market estimates by $2.39.
In April, JPMorgan appreciated the hybrid cloud architecture of Equinix, Inc. (NASDAQ:EQIX) and lifted its price target on the stock to $880, with an Overweight rating on the shares.
REIT stocks are gaining traction thanks to their high dividend yields as tech stocks like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) continue to falter in 2022.
According to Insider Monkey’s Q1 database, Equinix, Inc. (NASDAQ:EQIX) was a part of 40 hedge fund portfolios, compared with 45 a quarter earlier. These hedge funds hold a collective stake of over $1.2 billion in the company. Impax Asset Management held a stake worth roughly $491 million in the company, becoming its largest stakeholder in Q1.
Baron Funds mentioned Equinix, Inc. (NASDAQ:EQIX) in its Q2 2021 investor letter. Here is what the firm has to say:
“The shares of Equinix, Inc. gained 18% in the most recent quarter. Equinix is the premier global data center company in the world. We believe the company is exceptionally well positioned to continue to benefit from powerful secular demand trends including strong growth in information technology outsourcing, increased cloud computing adoption, multi-year increases in mobile data traffic, global internet traffic, and the number of connected devices.”
5. Invesco Active U.S. Real Estate Fund (NYSE:PSR)
Invesco Active U.S. Real Estate Fund (NYSE:PSR) invests in securities that are included in the FTSE Nareit All Equity REIT index at the time of purchase. The fund selects the attractively valued stocks by using quantitative and statistical methods while managing risks. The fund was founded in 2008 and has delivered a 361.3% return to shareholders since then.
As of June, Invesco Active U.S. Real Estate Fund (NYSE:PSR) holds 81 stocks in its portfolio with an expense ratio of 0.35%. On March 28, the fund declared a quarterly distribution of $0.6307 per share, with a yield of 2.58%, as of June 13. In May, Morningstar gave the fund 4 stars out of 146 funds for its 10-year performance.
Public Storage (NYSE:PSA) is one of the major holdings of Invesco Active U.S. Real Estate Fund (NYSE:PSR), representing 1.64% of its portfolio. The self-storage company provides storage units for the personal and business needs of its consumers. Appreciating the company’s strong balance sheet, BMO Capital upgraded Public Storage (NYSE:PSA) to Outperform in May, with a $370 price target. The firm highlighted the defensive nature of the storage sector, which is highly needed in the current unstable environment.
In Q1 2022, Public Storage (NYSE:PSA) posted an FFO of $3.65, which beat estimates by $0.06. The company’s revenue for the quarter also presented a 15.8% year-over-year growth at $749.2 million.
At the end of March 2022, 35 hedge funds in Insider Monkey’s database reported owning stakes in Public Storage (NYSE:PSA), up from 33 in the previous quarter. The collective value of these stakes is over $874.6 million. With a stake worth $260 million, AQR Capital held the largest position in the California-based company in Q1 2022.
Baron Funds mentioned Public Storage (NYSE:PSA) in its recently-published Q1 2022 investor letter. Here is what the firm has to say:
“Public Storage Incorporated is a REIT that is the world’s largest owner, operator, and developer of self-storage facilities. The company’s nearly 2,500 self-storage facilities across the U.S. serve more than one million customers. The company has achieved the number one market position in 14 of its top 15 markets and the leading brand among consumers. We are encouraged about the company’s prospects due to our expectations for the continuation of strong occupancy and rent trends, limited new supply, mid-teens organic cash flow growth, the potential for mergers and acquisitions activity in part due to the company’s well-capitalized and low leverage balance sheet, and the ability to increase rents monthly to combat inflation headwinds. We believe Public Storage’s shares are currently valued at a discount to private market self-storage values and offer prospects for mid-teens total returns over the next few years.”
4. Vanguard Global ex-U.S. Real Estate Index Fund (NASDAQ:VNQI)
Vanguard Global ex-U.S. Real Estate Index Fund (NASDAQ:VNQI) invests in stocks in the S&P 500 Global ex-US Property Index that represents real estate stocks in over 30 countries. The firm aims to provide broad exposure to investors across international REIT equity markets. The fund has a total of 702 stocks in its portfolio, with total net assets amounting to $5.1 billion.
As Vanguard Global ex-U.S. Real Estate Index Fund (NASDAQ:VNQI) excludes American companies, its holdings are scattered around the world, with Europe, the Pacific, and North America representing 25.8%, 47.8%, and 3.20% of its portfolio, respectively.
Goodman Group (ASX:GMG.AX) is the fund’s second-largest holding, representing 2.53% of its portfolio. The company is an integrated commercial and industrial property group that manages real estate in over 14 countries. At the end of March 2022, Goodman Group (ASX:GMG.AX) reported over $68.7 billion in assets under management. Moreover, the company also reported its 89 projects that are under development and hold a total value of $13.4 billion.
3. The Real Estate Select Sector SPDR Fund (NYSE:XLRE)
The Real Estate Select Sector SPDR Fund (NYSE:XLRE) covers a variety of top real estate companies in the S&P 500 index. It includes companies from real estate management and development and REITs. The fund was founded in 2015 and returned 31.7% to shareholders since then. As of June, The Real Estate Select Sector SPDR Fund (NYSE:XLRE) holds 39 stocks in its portfolio while offering an expense ratio of 0.10%. The fund’s net assets stood at $5.05 million. On March 21, the fund announced a quarterly dividend of $0.2685 per share, with a yield of 2.61%, as of June 13.
One of the most prominent holdings of The Real Estate Select Sector SPDR Fund (NYSE:XLRE) is Digital Realty Trust, Inc. (NYSE:DLR), a California-based REIT that invests in carrier-neutral data centers and also provides peering services. In June, Citigroup acknowledged the multi-product strategy of the company which would help it to grow its future revenues and profits per share. Given this, the firm set a $160 price target on Digital Realty Trust, Inc. (NYSE:DLR), while maintaining a Buy rating on the shares.
In Q1 2022, Digital Realty Trust, Inc. (NYSE:DLR) posted an FFO of $1.67, which exceeded expectations by $0.02. Also, the company’s revenue showed a 4% year-over-year growth at $1.13 billion and also fell in line with the market estimates. For FY22, the company expects its FFO to fall between $6.80 and $6.90.
The number of hedge funds tracked by Insider Monkey owning stakes in Digital Realty Trust, Inc. (NYSE:DLR) grew to 31 in Q1 2022, from 26 in the previous quarter. These stakes hold a collective value of $556.7 million, up from $409 million worth of stakes held by hedge funds in Q4 2021. Steve Cohen and Ken Griffin were the major stakeholders of the company at the end of March 2022.
2. Schwab U.S. REIT ETF (NYSE:SCHH)
Schwab U.S. REIT ETF (NYSE:SCHH) is a passively-managed fund that tracks the market-cap-weighted index of US real estate investment trusts and excludes mortgage and hybrid REITs. The fund offers simple access to REITs as its holdings are restricted to investment trusts that directly own real estate. As of June, the fund has 141 holdings, with the top 10 positions representing 43% of the portfolio. As Schwab U.S. REIT ETF (NYSE:SCHH) selects its stocks based on market cap, the average market cap of its securities stood at $42.4 billion, as recorded in March 2022. The fund’s total assets amounted to over $6 billion at the end of May.
One of the major holdings of Schwab U.S. REIT ETF (NYSE:SCHH) is Prologis, Inc. (NYSE:PLD), a California-based REIT formed by the merger of AMB Property and ProLogis in 2011. In Q1 2022, the company posted an FFO of $1.09, beating estimates by $0.02. The company reported revenue of $1.22 billion, showcasing a 6% year-over-year growth and also beat market consensus by $130 million. For FY22, Prologis, Inc. (NYSE:PLD) expects its FFO to be in the range of $5.10 to $5.16, versus the consensus of $5.04. In June, Wells Fargo highlighted the strong business fundamentals of PLD and set a $160 price target on the stock, with an Overweight rating on the shares.
As per Insider Monkey’s database for Q1, 37 hedge funds owned stakes in Prologis, Inc. (NYSE:PLD), the same as in the previous quarter. The consolidated value of these stakes is over $546.5 million. AEW Capital Management held the largest stake in the company in Q1, worth $326.9 million.
1. Vanguard Real Estate Index Fund (NYSE:VNQ)
Vanguard Real Estate Index Fund (NYSE:VNQ) invests in stocks that are issued by REITs and tracks the return of the MSCI US Investable Market Real Estate 25/50 Index. As of June, there are a total of 183 stocks in the fund, with the top 10 holdings representing 45.3% of the portfolio. The fund’s total net assets stood at over $82.8 billion. On March 22, Vanguard Real Estate Index Fund (NYSE:VNQ) declared a quarterly distribution of $0.5767 per share, with a yield of 2.49%, as of June 13.
Welltower Inc. (NYSE:WELL) is one of the prominent holdings of the Vanguard Real Estate Index Fund (NYSE:VNQ), accounting for 2.28% of its portfolio. The REIT mainly invests in healthcare infrastructure. In May, RBC Capital raised its price target on WELL to $100, with an Outperform rating on the shares. The firm appreciated the company’s portfolio recovery and remained encouraged by the housing outlook in the US. Welltower Inc. (NYSE:WELL) reported growth in its Q1 2022 results that was driven by its acquisitions, as the company completed $787 million in acquisitions and loan funding during the quarter.
At the end of March 2022, 25 hedge funds tracked by Insider Monkey were bullish on Welltower Inc. (NYSE:WELL), up from 23 a quarter earlier. The consolidated value of these stakes is over $691.6 million.
You can also take a look at 10 Best Dividend ETFs to Buy According to Reddit and 10 Best Growth Stocks for the Next 10 Years
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Disclosure. None. 10 Best REIT ETFs to Buy Now is originally published on Insider Monkey.
