Many people believe that investing in real estate is the best way to guarantee returns on your money. But there are a couple of problems with this. The first is that it takes a lot of initial capital to begin investing in physical real estate. The second is that you usually have to wait years to realize your profit on your initial investment.
Investing in REIT stocks is a great comprise. REITs are companies that own and manage physical real estate properties. These companies collect monthly rent and distribute most of that to shareholders as dividends. In exchange, REITs pay almost no corporate income taxes. REIT stocks have long been popular among dividend and income investors. With the potential for the real estate market to bounce back, here are our picks for the top 3 real estate stocks to buy in March 2024.
Realty Income Corp (O)
Realty Income Corp (NYSE:O) is a REIT company that owns and operates commercial real estate across the United States and Europe. This REIT is one of the more popular ones on the market although the stock has lost nearly 11% so far in 2024. Thirteen analysts on Wall Street cover this decorated REIT and have a one-year target range of between $52.24 and $70.00 with an average price target of $61.35.
Why is O so appealing to REIT investors? The company owns and operates more than 15,450 rental properties with an occupancy rate of more than 98% and over $4 billion in base rent. Realty Income is also getting into the data center industry in the U.S. which is a modernized strategy compared to the company’s traditional retail clients. But of course, Realty Income is also well known for its monthly dividend which has a current yield of 5.89%. The company is a certified S&P 500 Dividend Aristocrat as it has raised its dividend in 29 consecutive years.
American Tower (AMT)
American Tower (NYSE:AMT) is an American REIT that owns and operates wireless and broadcast infrastructure. This company’s properties help connect the world’s technology and are partnered with many of the largest global wireless brands. As of March, 16 analysts cover these REIT stocks with a one-year price target range of $183.00 to $245.00 and an average price target of $226.69.
This REIT is one of the few that operate in the world’s wireless and broadcast industries. Who exactly does American Tower provide cellular towers for? The likes of AT&T, Verizon, T-Mobile, DISH, Telefonica, and Bharti Airtel. AMT also pays out a quarterly dividend which has been raised for twelve consecutive years with an average annual increase of 20% since 2012.
American Tower has a similar AFFO CAGR to Realty Income Corp. The company expects about 5.0% AFFO growth this year despite global interest rates remaining high. AMT is another popular REIT that has underperformed in 2024, providing a negative return of -7.8%. With mobile data usage expected to increase at a 20% CAGR through 2028, American Tower is a great way to play the rebound in the real estate market.
Equinix Inc (EQIX)
Equinix Inc (NASDAQ:EQIX) is the world’s largest data center REIT and is the third-largest REIT in the world by market cap behind only American Tower and Prologis (NYSE:PLD). This REIT has 20 analysts covering the stock with all but four of them recommending Equinix as a Buy or Strong Buy. They also have a one-year price target range of $767.00 to $1,020.00 and an average target of $912.90.
This REIT provides data centers and infrastructure for some of the world’s largest companies including Apple, Amazon and Meta Platforms. With new technologies like AI and machine learning requiring such large amounts of data, these data centers are very much in high demand.
For the full year 2024, Equinix anticipates AFFO growth of between 8-10% per share. The dividend yield currently sits at about 1.89% and is paid out quarterly. If you are looking for a way to gain exposure to data centers and even industries like AI through infrastructure, Equinix REIT is one of the best ways to do so on the market.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.