Best Real Estate Stocks Of 2022

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Companies that own or manage real estate are known as real estate stocks. Real estate investment trusts (REITs), a unique kind of publicly traded businesses that own real estate, are included in this category. Depending on the investment type, buying real estate stocks may give your portfolio steady income and tax benefits.

The top 10 real estate stocks by market capitalization have been gathered by Forbes Advisor to assist you in finding the best real estate businesses for your portfolio.

American Tower Corporation (AMT)

Market Cap

$101 billion

5-Year Avg. Annualized Return

11.4%

10-Year Avg. Annualized Return

13.1%

American Tower Corporation, a REIT that was established in 1995, owns, operates, and develops wireless and broadcast communications. It currently has more than 221,000 communications sites, 43,000 of which are spread out across the United States and Canada. 5,600 people work for the company in 22 different countries. Along with communication being a crucial component of this business, sustainability and workplace equality are two other key tenets of American Tower Corporation. By the year 2020, they would have achieved 54% of their objective to install solar panels at more than 5,000 communications sites and reduce greenhouse gas emissions associated with diesel by 60%.

Equinix, Inc. (EQIX)

Market Cap

$53 billion

5-Year Avg. Annualized Return

6.8%

10-Year Avg. Annualized Return

12.3%

As a provider of data centers that connected and shared data traffic between competing networks, Equinix was established in Silicon Valley in 1998. For tax reasons, the company switched to a REIT in 2015, and as of right now, its global infrastructure is bigger than the combined size of its ten biggest rivals. More than 1,800 network services, 2,900 cloud and IT services, 1,250 financial services, and 600 content and digital media services are all accessible to customers through the company.

Over 430,000 metric tones of carbon dioxide equivalent emissions have been avoided by EQIX's energy efficiency programs since 2011, which have received over $129 million in funding.

Digital Realty Trust, Inc. (DLR)

Market Cap

$29 billion

5-Year Avg. Annualized Return

0.5%

10-Year Avg. Annualized Return

7.1%

A REIT called Digital Realty Trust offers cloud-based business solutions and owns and manages carrier-neutral data centers. Digital Realty was established in 2004 and offers colocation and peering services to clients all over the world. The company has over 290 data centers spread across 26 nations and 6 continents.

One of the company's main goals is to reduce its environmental impact, especially by using energy as efficiently as possible. To do this, it has built more green buildings than any other supplier in its sector, achieving a total reliance on wind power for its U.S. colocation services.

Simon Property Group, Inc. (SPG)

Market Cap

$30 billion

5-Year Avg. Annualized Return

-5%

10-Year Avg. Annualized Return

0.8%

A REIT, Simon Property Group owns, manages, and develops retail properties for eating, drinking, and entertainment. With locations across 37 states in North America and Puerto Rico, as well as in Europe and Asia, the company is one of the biggest owners and operators of these kinds of businesses globally.

SPG owns and manages premium outlets, lifestyle centers, as well as its international properties, and is also the largest mall operator in the United States. The company generates $60 billion in annual U.S. sales from 3 billion annual customers at more than 23,274 specialty shop locations across their portfolio.

Prologis, Inc. (PLD)

Market Cap

$77 billion

5-Year Avg. Annualized Return

12.3%

10-Year Avg. Annualized Return

12.2%

A logistics real estate company, Prologis, Inc. serves about 5,800 customers in the business-to-business and retail/online fulfilment sectors and focuses on high-barrier, high-growth markets. They were expected to own or have investments in homes and construction projects totaling 1 billion square feet in 19 nations as of March 2022, with $214 billion in assets under management and $3.5 billion in yearly net operating income.

Public Storage (PSA)

Market Cap

$52 billion

5-Year Avg. Annualized Return

10.1%

10-Year Avg. Annualized Return

10.5%

Throughout the nation, people are familiar with the recognisable orange and white "Public Storage" sign, and for good reason. Since opening its first self-storage facility in 1972, Public Storage has grown to become the world's largest owner and operator of such facilities. The company owns more than 170 million square feet of rentable space spread across nearly 2,500 facilities in the US and Europe. With more than a million customers spread across 38 states and seven EU countries, Public Storage is one of the biggest landlords in the world.

Despite how big they've become over the years, PSA is serious about its sustainability initiatives. They make a lot of effort to lessen their environmental impact by using 100% recycled moving boxes and supplies in their stores, solar power generation, and environmentally friendly water practises.

Types of Real Estate Stocks

Real estate stocks can be broken down into sub-sectors based on their businesses, much like any other sector of the stock market. Typically, the following sub-sectors make up the real estate sector:

1. Residential. Companies that specialize in owning and leasing residential real estate, such as apartments, condos, and executive housing, make up residential real estate stocks.

2. Commercial. Stocks of commercial real estate companies typically hold, manage, or create office or retail space for a variety of enterprises to occupy.

3. Healthcare. Healthcare-related facilities, such as senior housing, assisted living facilities, and post-acute care facilities, are purchased, built, or managed by healthcare real estate stocks.

4. Specialty. There are some specialist stocks that invest in things like entertainment spaces (like arenas) and other non-core property kinds in addition to REITs that engage in core property types like residential and commercial.

There are a number of real estate stock types that invest in businesses unrelated to real estate in addition to those that own, manage, or develop physical assets. These companies include those that invest in different mortgage-backed assets, such as mortgage REITs.

Benefits of Buying Real Estate Stocks

Diversity. Real estate stocks allow investors to purchase a single share of ownership that represents a whole portfolio of properties.

competent management. In order to optimize shareholder value, real estate businesses provide shareholders with a layer of expert management that is dedicated to managing the company's portfolio of properties.

Liquidity. Investors can invest in actual properties through publicly listed real estate stocks without having to find, acquire, and maintain the assets themselves. Additionally, if shareholders require access to cash, they can sell shares much more quickly.

Tax Advantages. Several significant tax benefits are available to businesses who lease real estate to create passive revenue.

Regular Income Regular dividend payments are normally made to shareholders of REIT shares based on the size of their investment.

Risks of Investing in Real Estate Stocks

Cost Of Management. While professional management is a benefit to real estate stock holders, it has a price. The net operating income of a real estate company can be significantly reduced by manager salaries and benefits.

Tepid growth. sluggish growth REITs are typically low-growth investments, in contrast to tech stocks and some other more volatile investments. Usually, they provide the most value to shareholders through consistent dividend payments.

Rate Of Change Risk. Interest rate changes put investors at risk because real estate companies frequently finance the properties in their portfolios. A company may produce less net income that can be distributed as dividends if interest rates increase.

Possible Market Reversals. Real estate markets frequently experience downturns, particularly during recessions. The 2008 financial crisis and the commercial real estate market during the Covid-19 pandemic in 2020 and 2021 are two recent examples.

How to Purchase Housing Stocks

Investors can use a brokerage account or a tax-qualified retirement account, such as an individual retirement account, to buy real estate stocks (IRA). Investors may occasionally even be able to make investments through a 401(k) account sponsored by their employer.

See our list of the top online brokers and investment apps if you don't already have a trading account or are looking for a new platform to trade through.

Also keep in mind that investing in individual stocks carries a higher risk than purchasing a diversified fund, even when those stocks are backed by tangible assets like real estate. Therefore, before making an investment, investors must conduct in-depth due diligence on companies and evaluate their financial situation.