7 REITs to Snap Up if the Fed Cuts Interest Rates


  • Equinix (EQIX): Equinix’s focus on digital infrastructures aligns with contemporary trends.
  • Welltower (WELL): Welltower serves a rapidly aging baby boomer population.
  • American Tower (AMT): American Tower aligns with the broader push for connectivity.
  • If monetary policy ever goes dovish, these are the REITs to buy.
REITs to Buy - 7 REITs to Snap Up if the Fed Cuts Interest Rates

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Experts often consider real estate the king of investments for good reason. Fundamentally, the planet isn’t likely to grow new land short of some awful seismic activity occurring. As a result, you can do many things with property that you can’t with other asset classes. However, the sector can be a pain and that’s where REITs to buy comes into play.

Here, we’re talking about real estate investment trusts or companies that either own or financially support income-producing real estate. While it may be better to own property outright, the reality is that the sector – whether we’re talking residential, commercial or industrial – is wildly expensive. By pooling money together, investors can become landlords without the headaches.

Part of the reason why REITs to buy have attracted so much attention is that they’re required to distribute at least 90% of their taxable income to shareholders in the form of dividends. Now, should the Federal Reserve lower interest rates down the line, the government would no longer compete with the yields of private enterprises.

That would be ideal for the sector. Below are REITs to buy covering a wide range of industries.

Equinix (EQIX)

corporate building with Equinix (EQIX) logo on it
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Based in Redwood, City, California, Equinix (NASDAQ:EQIX) represents one of the top REITs to buy given current circumstances. Per its public profile, Equinix labels itself as the world’s digital infrastructure company. The business focuses on providing its enterprise-level clients with physical and virtual infrastructure to help accelerate demand. Thanks to the rise of data centers, EQIX deserves a closer look.

Not surprisingly, analysts rate shares a consensus moderate buy with a $911.13 average price target. Further, the high-side view lands at $1,020 per share. Aside from a miss in its most recent disclosure for the first quarter of 2024, Equinix has been consistently strong. Over the past four quarters, its average earnings per share landed at $2.49. That translated to an earnings surprise of 11.55%.

During the trailing 12 months (TTM), Equinix posted net income of $941.18 million, equating to EPS of $9.99. Revenue reached $7.88 billion. For fiscal 2024, covering experts anticipate EPS to rise 2.6% to $10.58, while revenue may increase by 7% to $8.76 billion.

Equinix offers a forward dividend yield of 2.23%, making it one of the well-rounded REITs to buy.

Welltower (WELL)

WellTower (WELL) logo displayed on a website and magnified
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From a fundamental standpoint, Welltower (NYSE:WELL) may be one of the most important REITs to buy. Based in Toledo, Ohio, the real estate specialist focuses on healthcare infrastructure. Primarily, it invests in leading senior housing operators, along with post-acute providers and health systems. Thanks to the baby boom, there’s a ton of people that will likely require senior care. Thus, simple math favors WELL stock.

Despite the positive implications, Welltower is also a tricky investment. In the past four quarters, the company’s average EPS reached 20.3 cents. However, the enterprise missed its earnings targets in Q4 2023 and Q1 2024. As a result, the average surprise came out to be nearly 1% below parity. That’s not particularly encouraging.

At the same time, net income during the TTM period reached $441.57 million, translating to EPS of 86 cents. Revenue during the period hit $6.94 billion. For fiscal 2024, analysts are anticipating EPS to nearly double to reach $1.31. Sales may see a 14.6% bump to $6.64 billion.

Regarding passive income, Welltower offers a forward yield of 2.36%. Combined with its demographic relevance, WELL ranks among the REITs to buy.

American Tower (AMT)

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Headquartered in Boston, Massachusetts, American Tower (NYSE:AMT) represents one of the largest global REITs. Per its corporate profile, American is a leading independent owner, operator and developer of multitenant communication networks. Its portfolio extends to over 224,000 communication sites along with an interconnected footprint of domestic data center facilities. Thanks to the push for connectivity-based solutions, AMT should benefit from burgeoning demand.

To be fair, American in recent history has been inconsistent financially. In the past four quarters, the company’s average EPS landed at almost $1.11. However, this tally resulted in an average earnings surprise of almost 17% below breakeven. In large part, that’s because Q4 2023 was a huge miss, with EPS of 18 cents falling well below the consensus target of 94 cents.

During the TTM period, net income reached $2.06 billion, translating to EPS of $4.42. Revenue hit $11.21 billion. For fiscal 2024, analysts anticipate a more than doubling in earnings to hit $6.65 per share. However, revenue may be more modest, up less than 1% to reach $11.22 billion.

Still, profitability is the focus, with AMT offering a forward yield of 3.33%. It could be one of the top REITs to buy.

AvalonBay Communities (AVB)

AVB stock: an Avalon sign in a garden next to a road
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Headquartered in Arlington, Virginia, AvalonBay Communities (NYSE:AVB) owns or holds a direct or indirect ownership interest in residential rentals. Its portfolio covers 299 apartment complexes containing 90,669 apartment homes in 12 states and the District of Columbia. It focuses on development, redevelopment, acquisition and management of apartment communities in leading metropolitan areas.

Cynically, because of the rush to acquire homes during the low-interest-rate environment of the pandemic, many people have been caught out. However, humans need a place to live and that’s where AvalonBay shines. Until the housing situation is resolved, AVB offers a potentially viable investment. While it’s not always the most consistent player, when it hits, it hits big.

During the past four quarters, AVB’s average EPS reached $1.68. In terms of the average earnings surprise, the enterprise hit 25.08%. That’s impressive though with the current circumstances, perhaps not surprising.

Although fiscal 2024 may see a 25% decline in EPS, analysts are looking for a 14.6% expansion of the top line to $2.88 billion. Finally, the company offers a forward annual dividend yield of 3.41%. Combined with the urgency of its business model, AvalonBay is one of the REITs to buy.

Public Storage (PSA)

a Public Storage sign in front of a facility of storage buildings
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Based in Glendale, California, Public Storage (NYSE:PSA) is exactly what it sounds like: one of the REITs to buy that primarily acquires, develops, owns and operates self-storage facilities. As of the end of last year, PSA had interest in 3,044 self-storage centers located in 40 states. The approximate net rental square footage reached about 218 million.

Fundamentally, many baby boomers are looking to downsize while maintaining ownership of important (but bulky) heirlooms. On the other end of the demographic spectrum, young people may turn to storage units for the same reason: store bulky items. However, their main objective is to downsize due to the limitations of their spending power.

To be fair, PSA hasn’t always been consistent. In the past four quarters, its average EPS reached $2.75. However, the average earnings surprise was less than 1% due to a sizable miss in Q4. Still, it could make a recovery later this year, with blue-sky EPS projections calling for growth of 4.6%.

Regarding passive income, PSA offers a forward yield of 4.38%. It’s one of the REITs to buy if you’re looking for a logical narrative.

Realty Income (O)

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Operating out of San Diego, California, Realty Income (NYSE:O) ranks among the most popular REITs to buy. For one thing, the company pays out monthly, which is a huge advantage for those seeking income they can live on. There aren’t too many obligations which you can pay off quarterly. Second, the enterprise benefits from cash flow from over 15,450 real estate properties.

Essentially, if people need it or want it, there’s a good chance that Realty Income owns the property that facilitates such transactions. To be fair, the company hasn’t enjoyed the most robust success recently. In the past four quarters, the average EPS reached 27 cents. This metric translated to an earnings surprise of 18.4% below parity. That’s not great, obviously.

However, during the TTM period, Realty’s net income hit $776.99 million or EPS of $1.08. Revenue pinged at $4.4 billion. For fiscal 2024, analysts are looking for EPS to expand by over 7% to reach $1.35. On the top line, sales could jump 22.65 to land at $5 billion.

Lastly, the company pays a robust dividend yield of 5.85%. That’s not something you can ignore despite some recent performance flaws.

EPR Properties (EPR)

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Based in Kansas City, Missouri, EPR Properties (NYSE:EPR) represents the leading diversified experiential net lease REIT, according to its profile. Behind all this corporate talk is a simple business model: EPR focuses on entertainment-related properties. These include amusement parks, movie theaters, ski resorts and similar businesses. Despite challenges in the consumer economy, EPR deserves a closer look.

That’s largely because industry data shows that the U.S. travel boom has not yet slowed down. Indeed, if we were to look at the narrative opportunistically, this boom could accelerate. While consumers do complain about inflation, relatively speaking, our dollar goes further than many other currencies. Therefore, when Americans travel abroad, they can maximize their fun.

Now, EPR is focused on the domestic side of the entertainment business. Still, consumers are prioritizing experiential expenditures. As a result, demand for EPR could be much bigger than projected. Analysts anticipate double-digit sales growth declines in fiscal 2024, which seems quite odd.

For those interested in taking the dive into EPR, the trust offers a forward dividend yield of 8.49%. That’s definitely something to think about.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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