5 Must-Buy REITs for Your January Buy List


  • The time to look for REITs to buy is now, as multiples become more reasonable for these dividend vehicles.
  • Simon Property Group (SPG): A successful Q3 led this REIT to raise its guidance and dividend as occupancy and rents increased.
  • Digital Realty Trust (DLR): Should perform well over the long-term as the use of data centers and related technology increases.
  • Healthpeak Properties (PEAK): Driven by strong tenant retention levels and same-store net operating income growth.
  • Essex Property Trust (ESS): Foray into high-demand markets is going well, meaning the juicy dividend yield of 4.2% is secure.
  • Ventas (VTR): With an aging baby boomer population, this healthcare REIT benefits from secular tailwinds.
must-buy REITs - 5 Must-Buy REITs for Your January Buy List

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REITs (Real Estate Investment Trusts) are a great way investors gain gain exposure to the real estate market, without putting down a large chunk of money for an investment. These assets are currently gaining widespread popularity as long-term investment options, with many investors now looking for must-buy REITs.

With REITs varying in terms of their holdings (different asset classes and risk levels), there is a REIT for every type of investor. When researching this sector, it’s important that investors consider each investment’s risk level, expected rate of return, management team, and other applicable metrics. When done correctly, REITs can provide short- and long-term growth potential.

REITs provide investors with a way to invest in real estate without purchasing physical property. They are also an excellent option for investors who want to diversify their portfolios and benefit from the high return potential over the long-run.

Reliable dividend payments are becoming much more attractive in today’s economy. Inflation is at its highest levels in four decades, and there is plenty of economic uncertainty. This article will discuss some of the must-buy REITs that look attractive in this current environment. All offer excellent yields and are trading at attractive multiples due to the ongoing bear market. But remember, before diving in, make sure the REIT in question supports your investment profile.

With that said, here are five top must-buy REITs for those dissecting this space.

SPR Simon Property Group $118.87
DLR Digital Realty Trust $101.38
PEAK Healthpeak Properties $26.74
ESS Essex Properties Trust $214.70
VTR Ventas $47.82

Simon Property Group (SPG)

building facade of simon property group (SPG)
Source: Jonathan Weiss / Shutterstock.com

Dividend yield: 6.11%

Investing in real estate can be very lucrative, and Simon Property (NYSE:SPG) is a prime example. It’s first on this list of must-buy REITs for a reason. As a manager of one of the best portfolios in the United States, Simon specializes in regional malls, outlet centers, and community/lifestyle centers.

Mall shopping provides an enjoyable pass time for locals, increasingly drawing international tourists. These properties can offer something that online shopping or other retailers simply cannot – an experience far beyond purchasing goods. Because these assets are unique and provide satisfying experiences, investing in a REIT like Simon Property is often very rewarding.

Despite having an attractive portfolio, Simon Property Group is down approximately 28% over the past year. Broader macroeconomic trends are to blame here. The pandemic affected the shopping industry more than others, so investors have been reluctant to return to this space. Plus, inflation and other factors are also having an impact.

On its own, Simon Property Group is doing very well. The REIT reported strong Q3 earnings and revenue growth due to increasing occupancy and rents. The firm decided to increase its full-year guidance and dividend in light of its impressive performance.

Digital Realty Trust (DLR)

Image of computer servers lined up in a dark room
Source: Gorodenkoff/Shutterstock.com

Dividend yield: 5.02%

Digital Realty Trust (NYSE:DLR) is an invaluable REIT that continues to provide quality services despite economic challenges. The company’s third-quarter performance was quite impressive in light of the difficulties surrounding the economy. Thanks to Digital Realty’s value-add business model and strong operational strengths, it remained buoyant. This allowed the trust to meet its client needs with efficiency and reliability. Investors can be sure that Digital Realty Trust is dedicated to offering the best portfolio of data centers, co-location, and interconnected solutions to ensure a secure digital infrastructure for businesses worldwide.

Recently, Digital Realty has earned the distinction of being a multinational powerhouse, consistently surpassing its already-high expectations. Displaying a revenue growth that greatly exceeded those predictions, its third-quarter performance stunned the industry by achieving a record-high $176 million in annualized bookings.

Although impressive, this accomplishment also reveals the trust’s ability to evolve sustainably from a simple provider of data center space to one that can successfully provide for space, power, and connection needs. This capacity for adaptation demonstrates why investors have every reason to remain deeply impressed with Digital Realty’s potential, as this only illustrates the potential growth of this particular REIT.

Healthpeak Properties (PEAK)

two doctors look over a piece of paper while standing in a hallway
Source: Shutterstock

Dividend yield: 4.58%

Healthpeak Properties (NYSE:PEAK) is a U.S. healthcare REIT that has been performing extraordinarily well over the past year, evidenced by its third-quarter same-store cash NOI growth of 5.1%. This exceeded expectations and proved the company’s ability to adjust its strategy to succeed in difficult times. Healthpeak has made wise strategic decisions, divesting most of their senior housing assets, raising roughly $4 billion, and focusing their remaining portfolio on Healthpeak’s lucrative life science and medical office assets. These prudent decisions has solidified this REIT as one of the top healthcare options to watch in 2023.

This past quarter’s strong results were largely driven by strong tenant retention levels and same-store net operating income growth. These metrics are important for long-term investors to consider. Indeed, I think these past results could be indicative of future performance. Healthpeak Properties has proven it has what it takes to bounce back from adversity and generate impressive shareholder returns. If you are looking for REITs to buy in the healthcare space, look no further.

Essex Property Trust (ESS)

EU Modern european complex of apartment buildings. Apartment buildings
Source: Roman Babakin / Shutterstock

Dividend yield: 4.23%

Essex Property Trust (NYSE:ESS) has become a prominent player in the California and Pacific Northwest real estate markets. The REIT’s varied portfolio includes apartments, condominiums, townhomes, and other multifamily dwellings in some of these regions’ most desirable real estate markets.

Owning these properties entitles investors to certain benefits, such as long-term leases and steady occupancy levels from tenants. With consistent investment returns generated by each property, this powerhouse REIT sets a high bar for all who follow in their footsteps.

Essex is taking advantage of the booming markets in Los Angeles, San Diego, San Francisco, San Jose, and Seattle to expand their business. This presents an incredible opportunity for their development and growth. Home to millions of Americans, these bustling cities are experiencing increased income growth and favorable single-family housing costs, further accentuating the potential for same-store sales growth. These conditions create an optimistic outlook for attracting new customers while increasing current value. These exciting prospects could potentially lead Essex to success in its current markets.

Ventas (VTR)

A nurse is helping a older woman. Elder care. Senior care.
Source: Rido / Shutterstock

Dividend yield: 3.84%

Last on this list of must-buy REITs is Ventas (NYSE:VTR), an established player specializing in healthcare facilities and senior living communities. From medical office buildings to senior housing and hospitals, this REIT manages various properties that serve a range of healthcare needs. It owns approximately 1,200 properties across the U.S., U.K., and Canada. Their expertise has set them apart from many competitors, resulting in Ventas’ steady growth as a leading provider of healthcare services in North America and around the world.

Ventas’ senior housing portfolio performed incredibly well in the third quarter, with an impressive 8.7% same-store revenue growth reported. Management expects more good news in the fourth quarter, where same-store NOI is expected to grow substantially. As the baby boomer generation ages, demand for senior housing services is expected to continue increasing over the long-term. Thus, Ventas is clearly in a prime position to capitalize on this demographic shift and continue its success into the foreseeable future, making it one of the best REITs to buy.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/01/5-must-buy-reits-for-your-january-buy-list-spg-dlr-peak-ess-vtr/.

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