Best Real Estate Stocks to Buy in 2024

Real estate stocks provide the opportunity to invest in real estate without all the hassle of dealing with tenants, lawn services or broken pipes. Real estate stocks, though, have underperformed this year, falling more than 10%, reflecting the sluggishness of the housing market in the US and elsewhere.  

The combination of higher mortgage rates and home prices have made new homes harder to afford. The average interest rate for a 30-year fixed mortgage is currently around 7.20% to 7.30%, more than doubling from where it was at the start of 2022 before the US Federal Reserve embarked on a tightening cycle. In March, housing starts, which shows the start of construction on new residential units, fell 14.7%, according to government data, indicating that the housing market struggles to recover.

The same interest rates that have driven up mortgage rates have also adversely affected real estate investment trusts (REITS), which buy properties and lease them out, because they made it harder for them to borrow. However, in a classic bad news, good news case, the decline in real estate stocks means that investors can find bargains. In this guide, we present 10 of the best real estate stocks to help you pick the right investments.

Best Real Estate Stocks to Buy in 2024

Here’s a quick overview of the 10 best real estate stocks to pick in our view.

  1. Lennar Homes: Present in 26 US states and building for first-time, move-up, active adult, and luxury homebuyers, it also offers mortgages. In areas where it offers them, 72% of its home buyers chose its loans.
  2. The Realty Company: The REIT is popular with income-oriented investors because it delivers a monthly dividend, which has increased for 106 consecutive quarters. It owns 15,450 commercial properties.
  3. Prologis: The REIT focuses on logistics but has also recently gotten into buying and leasing data centers. It has 6,700 tenants, mostly in business-to-business and retail-online fulfillment businesses. 
  4. D.R. Horton: It’s the largest US homebuilder by volume and operates in 119 markets in 33 states. It has built more than a million homes in its 45-year history, and in fiscal 2023, built 87,801 homes.
  5. Arcadis: The global engineering and architecture firm is based in The Netherlands and specializes in sustainable buildings. Last year, it also created an AI-driven tool to inspect bridge health, using drones.  
  6. Camden Property Trust: The REIT focuses on apartments and condos in high-growth areas of the Sun Belt. The housing shortage and high mortgage rates are driving up the demand for more apartments.
  7. Sekisui House: The Japanese home builder does high-quality urban developments, build-to-order homes, remodeling and rental property management in the UK, Japan, China, Singapore, the US and Australia.
  8. CareTrust: The US REIT owns, develops and leases skilled nursing, seniors housing and other healthcare-related properties. It owns 213 properties that it leases to 23 operators.
  9. Stag Industrial: The US warehouse and distribution center REIT is benefiting from businesses who are looking to improve their supply chains as well as from the larger trend of increased e-commerce. 
  10. Arbor Realty Trust: The US mortgage REIT focuses mainly on commercial properties, providing loan origination and servicing for rental projects, and other diverse commercial real estate assets.

A Closer Look at the Top Real Estate Stocks to Invest in

Let’s take an in-depth look at the top real estate stocks to invest in 2024:

1. Lennar Homes – Big Backlog of Orders Despite Higher Interest Rates

The company’s stock took a tumble when co-CEO Stuart Miller said that he was beginning to see signs of stress among home buyers, due mainly to high interest rates. “Higher prices have also started to lead to increased personal and credit card debt as families stretch to pay their bills,” Miller said in the company’s fourth-quarter earnings call. “We’ve started to see early evidence of debt delinquency showing up and derailing some mortgage applications.”

Lennar Corp. chartIn the first quarter, revenue rose 13% year over year, to $7.3 billion and EPS was up 25% to $2.57. New orders for homes increased 28% in the quarter and the order backlog was at $16,270, with a value of $7.4 billion.

Lennar repurchased 3.4 million of its shares, worth $506 million and increased its share buyback program for an additional $5 billion of shares. It also raised its dividend by 33% to $2 per share and over the past five years has increased its dividend by 115%.

Ticker  P/E  Dividend Yield
NYSE: LEN 10.63 1.32%

2. The Realty Company – Regular Monthly Dividend Raises, Solid Tenants

As with many REITs, the stock has slumped a bit due to concerns over high interest rates. REITs make their money from the spread between what they charge their tenants for rent and what they have to pay in mortgages for those properties. When interest rates rise, it makes it harder for REITs to expand because that spread can narrow.

The Realty Company chartHowever, if you look at The Realty Company’s finances, it appears to be on solid ground. Last year, the company reported portfolio occupancy of 98.6%, meaning that all but a few of its properties were rented out. Its clients are a diverse group of well-known retailers, from 7-Eleven to CVS Pharmacies, to European sporting goods retailer Decathlon. Full-year revenue for 2023 was $4.079 billion, up 21.9% and adjusted funds from operation (AFFO) per share was $4, up 2%. FFO or AFFO, both of which measure cash from operations, is a better profitability metric for REITS than earnings per share.

The company, after purchasing Spirit Realty Capital in January, has said it isn’t planning to make any big purchases this year and has forecast AFFO growth of 4.3% at the midpoint, of the expected range of between $4.13 and $4.31. The Realty Company just raised its dividend for the 106th consecutive month and the AFFO payout ratio is only 56.4%, leaving room for continued growth.

Ticker  P/E  Dividend Yield
NYSE: O 40.50 6.05%

3. Prologis – Stock Price Reaching Oversold Territory

Even though Prologis posted revenue and profit increases in the first quarter, the stock price has fallen because it’s guidance disappointed investors. Prologis, though, is a good long-term play as it’s diversifying its holdings beyond logistics facilities and plans to build or purchase 20 data centers over the next five years as they are expected to be in demand due to the spread of AI applications and the digitization trend.

prologis chartIn the first quarter, Prologis’ core FFO per share was $1.28, up 4.9%, year over year, and revenue was $1.97 billion, rising 10.6% from the same period last year. Despite those numbers, the company said it expects a drop in average occupancy and reduced its guidance for same-store growth and earnings. Still, the company is expecting 2024 core FFO growth of around 8%, down slightly from the 8.7% growth it had last year.

Prologis pays an above-average dividend, which it has increased for 11 straight years, including a 10.3% hike this year to $0.96 per quarterly share.

Ticker  P/E  Dividend Yield
NYSE: PLD 32.37 3.61%

4. D.R. Horton – Benefiting from a Tight Supply of New Homes

D.R. Horton makes money from nearly every step in the home buying process. It sells homes, but also does mortgage service, title service and can operate as an insurance agency. It’s also the majority owner of Forestar Group, a national residential lot development company.

dr horton chart

The largest US homebuilder by volume, the company constructed 87,801 homes, 6,248 single-family rental homes and 2,536 multifamily rental units, in fiscal 2023.

Through six months of fiscal 2024, revenue rose 10.5% year over year, to $16.8 billion, and EPS was 15.2% higher than in the same period a year earlier, at $6.54. Even though interest rates remain high, the company in the second quarter, saw a 46% quarter-over-quarter increase in sales orders. Demand remains high and supply low for new homes, so that works in the D.R. Horton’s favor.

It has raised its quarterly dividend recently by 20% to $0.30, the 13th consecutive year of lifting its dividend. It has also been active in stock repurchases, buying back $402 million of its own stock in the quarter, with plans to repurchase another $900 million worth of D.R. Horton stock.

Ticker  P/E  Dividend Yield
NYSE: DHI 10.61 0.81%

5. Arcadis – Sustainable Building Design on a Grand Scale

Arcadis is benefiting from the trend toward more green and sustainable building designs. It does everything from smaller projects for companies that want to be able to say their headquarters have net zero emissions, to high-profile construction projects, including the London City Airport and the A2 motorway.  

Arcadis chartArcadis was named in Fast Company’s prestigious list of the World’s Most Innovative Companies of 2024.  Its revenue rose 25% to €3.76 billion ($4 billion) in 2023, and its EPS increased 11% to €2.51. Its three business segments are places, mobility and intelligence, and the last had the greatest revenue growth at 356%.The company just landed contracts for its CurbIQ curbside management product for West Hollywood, California, and Kirkland, Washington. The platform aims to help optimize parking, reduce congestion, and enhance mobility.

It has increased its quarterly dividend by 15% to €0.90.

Ticker  P/E  Dividend Yield
OTC: ARCVF 33.22 1.44%

6. Camden Property Trust – In the Right Place for Continued Growth

The US REIT operates 172 communities for a total of 58,634 apartment homes, with an average occupancy rate of 95%, and has the lowest number of high balance delinquency units since the pandemic. Once it completes another four communities, its portfolio will rise to 59,800 apartment homes. Most of its apartment communities are near high-growth cities, including Atlanta, Austin, Dallas, Denver, Orlando, Phoenix, San Diego, and Tampa.

Camden Property Trust chartLast year, the company saw core FFO rise 4.6% to $6.52. This year, it projects core FFO to be between $6.59 and $6.89, a 3.3% increase at the midpoint. Revenue was $388.99, rising 3.19%. With interest rates expected to remain higher for longer, the company’s apartments become even more attractive to buyers who are priced out of buying homes.

Camden raised its quarterly dividend by 3% this year to $1.03, the third consecutive year of increasing it. 

Ticker  P/E  Dividend Yield
NYSE: CPT 25.90 4.32%

7. Sekisui House – Building a Bigger Presence in the States

The company made a big splash in January when it announced it was buying Denver-based MDC Holdings, a top-10 US homebuilder for $4.9 billion, making Sekisui the fifth largest home builder in the US.

Sekisui House chartThe thought is that Sekisui, which has built 2.62 million homes worldwide since its establishment in 1960, will be able to leverage its strengths in brokerage, buying and selling land to make the deal worthwhile. Sekisui House has been buying smaller regional homebuilders in the US since 2017, but MDC is its largest buy in the US.

Last year, the company reported revenue of 1.3 trillion yen ($20 billion), up 6.1% while EPS climbed by 11.8% to 309.29 yen ($2.01). The company pays a dividend every six month and has increased it for 12 consecutive years. Considering that the stock is trading for less than 11 times earnings, it appears to be an overlooked gem at this point.

Ticker  P/E  Dividend Yield
OTC: SKHSY 10.85 3.81%

8. CareTrust – Solid Fundamentals With a Focus on Growth

The company is bullish on the future of skilled nursing facilities and senior housing. That makes sense considering the aging of the population. Flush with $294 million in cash, it spent $60 million to purchase three continuing care retirement communities in Southern California in April. In March, it spent $55.6 million to buy three skilled nursing facilities in Texas and Missouri, adding to CareTrust’s master lease with affiliates of PACS Group. CareTrust chartIn the fourth quarter, it collected on 100% of its contracted rents, and for the year, it collected on 97.7% of them, showing no signs of stress among its tenants. Last year, the company posted revenue of $198.6 million, rising 5.9%, though normalized FFO per share was $1.41, down from $1.57 in 2022. This year, it’s forecasting normalized FFO per share to be between $1.43 and $1.45, though those estimates were made before its most recent acquisitions.

CareTrust just raised its quarterly dividend by 3.5% to $0.29, the 10th consecutive year of boosting it since going public in 2014. 

Ticker  P/E  Dividend Yield
NYSE: CTRE 46.99 4.91%

9. Stag Industrial – Steady Growth, Dependable Tenants

Stag owns 562 buildings across 41 states, most of them warehouses. As it has grown, it has consistently increased its FFO, rising from $12 million in 2011 to more than $400 million last year. Trends appear to be in its favor. According to a report by the Business Research Company, the warehousing and storage market was $714.79 in 2023 and is expected to grow at a CAGR of 7.4% through 2027, reaching a $950.68 million market by that time.

stag industrial trustIn 2023, Stag reported core FFO of $2.29, up 3.6% and revenue of $707.84 million, up 7.68%. The company focuses on single tenants and is selective and has had few delinquencies. In the fourth quarter, its occupancy rate was 98.2%.

The company, like The Realty Company, pays a monthly dividend. Its dividend of $0.123 per share equates to an annual dividend of $1.48, and it has raised its dividend for 13 consecutive years. 

Ticker  P/E  Dividend Yield
NYSE: STAG 32.21 4.3%

10. Arbor Realty Trust – High-Yielding Dividend, Steady Growth

The real estate finance REIT is a leading Fannie Mae delegated underwriting and service lender and Freddie Mac Optigo Seller/Servicer, both of which allow Arbor to be a lender regarding multifamily units. Arbor’s products also include commercial mortgage-backed security (CMBS), bridge, mezzanine, and preferred equity loans. In some ways, the high interest rates have helped its business.

Arbor Realty Trust chartIn 2023, Arbor had revenue of $293 million, up 28%, and EPS of $1.75, an increase of 5%. It also raised its dividend twice during the year for a total increase of 7.5% over the prior year. The company has increased its dividends for 12 consecutive years.

The yield on the dividend is around 13%, which is great for investors, but it also comes with some risk. The payout ratio is 89.5%, which is high, but not that high for a REIT, which is required, for tax purposes, to distribute 90% of its taxable income to shareholders. However, if home buying and home building decline, mortgage REITs (mREITs) such as Arbor Realty Trust will struggle. Still, that concern appears to be baked into the price as the stock trades for less than nine times earnings.

Ticker  P/E  Dividend Yield
NYSE: ABR 8.37 13.62%

What Are the Types of Real Estate Stocks?

Real estate stocks break down into a number of sectors and sub-sectors:

  • Commercial real estate stocks own and operate office or retail space for businesses. While the demand for office space has declined, retail real estate seems to be bouncing back. A good example of this is Realty Income, a REIT which leases its properties to a diversity of retail businesses.
  • Healthcare real estate stocks build, or manage healthcare facilities, everything from hospitals to assisted living facilities, medical offices and acute-care facilities. With more people expected to enter age groups that require more medical care, this area is expected to continue to grow. One of the top healthcare real estate stocks is CareTrust, which owns and leases skilled nursing, seniors housing and other healthcare buildings.
  • Residential stocks are those that specialize in properties where people live, from apartments and condos to single-family homes. Demand for new homes and apartments is tight and has been so for several years. Lennar Homes, Arbor Realty Trust and Sekisui House are prime examples of residential stocks.

Underperforming Sector Due for a Rally?

Shares of real estate stocks have lagged the overall market over the past year. The trend has continued into 2024 as investors are waiting for interest rates to drop as Fed had indicated before jumping back in.

The one-two punch of high interest rates and high home prices have hurt many stocks in the sector, particularly REITs, which are having to borrow at higher interest rates to grow:

Real estate indices

What Are the Biggest Trends Facing Real Estate Stocks?

  • Demand for Housing: Demand for housing, particularly affordable housing, remains high in many areas due to factors like population growth and millennials entering prime home-buying years. On top of that, more boomers are staying put in their homes instead of downsizing and that’s limiting the number of available listings.
  • High Interest Rates and Inflation: Rising interest rates, implemented by the Federal Reserve to combat inflation, are a major factor. Higher rates make mortgages more expensive and seem to be dampening demand for homes and affecting affordability. Those same higher rates affect commercial real estate as borrowing costs for businesses increase.
  • Shifting Workplace Norms: The rise of remote and hybrid work models is influencing demand for office space.  While some office space may be repurposed, there could be increased demand for suburban offices with shorter commutes and there continues to be a demand for homes with a room that can be used for an office.

Are There Real Estate ETFs?

Yes, there are several. Three of the top ones are Vanguard Real Estate ETF (VNQ), iShares Core U.S. REIT ETF (USRT) and the Real Estate Select Sector SPDR Fund (XLRE). 

Vanguard specializes in a broad exposure in the real estate market, focusing mainly on equity REITs, which own income-producing real estate such as office buildings, apartments, hotels and shopping centers. 

IShares Core U.S. REIT ETF also focuses mainly on equity REITs and roughly tracks FTSE NAREIT Equity REITs Index that includes various property sectors like residential (apartments), commercial (office buildings), industrial (warehouses), and healthcare facilities. 

The Real Estate Select Sector SPDR hews quite closely with the S&P 500® Real Estate Select Sector Index, which includes real estate management companies and mainly equity REITs.

Where to Get Real Estate Stock Tips and Insights

A good source for real estate stock information is AltIndex, a subscription-based service that uses alternative data and artificial intelligence (AI) to rate stocks. AltIndex updates its data throughout the day. 

AltIndex real estate Begin with the company’s ranking of best REIT stocks, which covers a big subset of real estate stocks. The list updates every half an hour and also provides real-time share prices. The list uses an AI score, taken from several datasets, to show which stocks are likely to make a big move. Stocks are scored from 1 to 100, simplifying selections for investors. AltIndex relies on web searches, customer satisfaction ratings, social media, and app downloads, to help it analyze a company.

There’s also a stock screener that can be used to look specifically at REITs, with a drop-down menu that can rate them according to several categories.

AltIndex has more than 10,000 members and provides more than 100,000 stock insights and alerts each day, and has a strong win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well many other useful features.

Conclusion

Real estate stocks have several advantages over other stocks by providing greater stability, lower risk and higher dividends. The types of real estate stocks vary from mortgage REITs to home builder companies and warehouse REITs, so it takes a little research to determine what might be a good real estate stock to buy right now.

The current higher interest rates are hurting some real estate companies by making it harder to borrow to grow their business as well as by turning potential customers away. However, in the long run, the value of real estate continues to climb and the current shortage of homes points to an extended run for companies. It’s also worth noting that interest rates are still low compared to historical norms. Investing in real estate is a good way for investors to diversify their portfolios and add a little value at the same time.

References

https://investors.lennar.com/~/media/Files/L/Lennar-IR-V3/press-release/q1-2024-earnings-release.pdf

https://www.arcadis.com/en/news/global/2024/4/arcadis-to-provide-innovative-curbside-management-solutions

https://s28.q4cdn.com/425223795/files/doc_presentations/2024/Mar/01/030424-investor-presentation.pdf

https://investor.caretrustreit.com/news/news-details/2024/CareTrust-REIT-Invests-60-Million-in-Acquisition-of-Three-Southern-California-Continuing-Care-Retirement-Communities/default.aspx

https://investor.caretrustreit.com/news/news-details/2024/CareTrust-REIT-Announces-Fourth-Quarter–Full-Year-2023-Operating-Results/default.aspx

https://ir.arbor.com/news-releases/news-release-details/arbor-realty-trust-reports-fourth-quarter-and-full-year-2023

FAQs

What’s the top real estate stock right now?

What are the advantages of real estate stocks?

What are the disadvantages of real estate stocks?

 

Jim Halley
Editor
Jim Halley
Editor

I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…