In this article, we discuss 10 best REIT ETFs to buy now. You can skip our detailed analysis of the real estate industry and other exchange-traded funds in the list, and go directly to read 5 Best REIT ETFs to Buy Now.
Over the years, exchange-traded funds (ETFs) have seen a steady rise popularity, as they offer lower operational costs to investors as compared with traditional funds. In 2021, approximately 445 ETFs were launched, with total assets of $1 trillion, as reported by Financial Times.
In the ETF world, investors are flocking to REIT ETFs thanks to their steady dividend returns and growth prospects. This trend is gaining pace especially after a huge spike in inflation. In 2021, the real estate sector bounced back from its pandemic-related lows, as global real estate markets returned 27.2%, according to a report by Morgan Stanley.
On the other hand, growth ETFs which often track tech stocks like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) are down in 2022 amid a broader sell-off.
In this article, we discuss the best REIT ETFs to buy now. The ETFs mentioned in the list invest mainly in real estate investment trusts to offer full exposure to the real estate sector to investors. The major holdings of the ETFs are also mentioned to provide an in-depth analysis of these funds.
Best REIT ETFs to Buy Now
10. JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE)
JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE) is a passively managed REIT ETF that tracks small, mid, and large-cap companies that are involved in the ownership and management of US real estate. As of June, the fund holds 139 stocks, with the top 10 holdings representing roughly 40% of the portfolio. The fund’s total assets amount to over $1.32 billion.
Realty Income Corporation (NYSE:O) is the fourth-largest holding of JPMorgan BetaBuilders MSCI U.S. REIT ETF (BATS:BBRE), accounting for 3.58% of the fund’s portfolio. In Q1 2022, the company reported solid quarterly results, posting an FFO of $0.98, which beat estimates by $0.01. Moreover, its revenue of $807 million also exceeded the market consensus by $58.6 million. Realty Income Corporation (NYSE:O) currently offers a monthly dividend of $0.247 per share, with a dividend yield of 4.49%, as of the close of June 13.
As per Insider Monkey’s Q1 2022 database, 22 hedge funds owned stakes in Realty Income Corporation (NYSE:O), compared with 30 funds in the previous quarter. The collective value of these stakes is over $284.8 million. Among these hedge funds, Glendon Capital Management held the largest stake in the company in Q1, worth $128.6 million.
As major stocks, such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) are falling in 2022 due to the pressure on the tech sector, some real estate stocks, such as Realty Income Corporation (NYSE:O) also generated negative returns for shareholders, having lost 11.2% of its value in 2022 so far.
9. Global X SuperDividend REIT ETF (NASDAQ:SRET)
Global X SuperDividend REIT ETF (NASDAQ:SRET) invests in some of the highest yielding REITs globally. The fund invests internationally, but over 55% of its net assets are in the US. Mortgage REITs take up the major portion of the fund, representing 38.87% of its portfolio. As of June 2022, the fund has total net assets of over $345 million. Moreover, the fund has given monthly dividends to shareholders consecutively for the past 7 years.
Physicians Realty Trust (NYSE:DOC) is one of the major holdings of Global X SuperDividend REIT ETF (NASDAQ:SRET), representing 4.00% of the fund’s portfolio. In April, Barclays initiated its coverage of the stock with an Overweight rating and a $20 price target, highlighting the company’s stable business model. The company’s Q1 results also showed its strength as it generated $130.3 million in revenue, up 15% from the prior-year quarter. Moreover, Physicians Realty Trust (NYSE:DOC) also pays a quarterly dividend of $0.23 per share, with an attractive dividend yield of 5.31%.
At the end of March 2022, 14 hedge funds tracked by Insider Monkey reported owning stakes in Physicians Realty Trust (NYSE:DOC), down from 18 in the previous quarter. The collective value of these stakes is over $91.5 million.
8. Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY)
Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY) tracks the performance of the KBW NASDAQ Premium Yield Equity REIT Index. The fund generally invests at least 90% of its total assets in small and mid-cap equity REITs that offer competitive dividend yields. Currently, the fund holds 28 stocks, with a total expense ratio of 0.35%. On May 23, Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY) announced a monthly distribution of $0.1123 per share, with a yield of 5.94%, as of the close of June 13.
A notable stock in Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY)’s portfolio is EPR Properties (NYSE:EPR), a Missouri-based real estate investment trust that invests in entertainment properties. The company recently expanded its operations in Canada, acquiring two properties in the country worth $142 million. Its Q1 2022 earnings report showed post-pandemic recovery due to healthy tenant performance. EPR Properties (NYSE:EPR) reported revenue of $157.4 million in the first quarter, beating estimates by $11.9 million.
On May 16, EPR Properties (NYSE:EPR) announced a quarterly dividend of $.275 per share, in line with its previous dividend. As of June 13, the stock’s dividend yield came to be recorded at 7.19%.
Insider Monkey’s Q1 2022 database showed a spike in the hedge fund interest in EPR Properties (NYSE:EPR), as 25 funds owned stakes in the company, up from 22 a quarter earlier. The consolidated value of these stakes is over $225.5 million. Israel Englander’s Millennium Management was the company’s leading shareholder in the first quarter, owning stakes worth $42.5 million.
7. Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE)
Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE) tracks the performance of the US real estate equities selected from the S&P 500. The fund and the index are rebalanced quarterly to check the accurate representation of its underlying stocks. As of June, Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE)’s portfolio contains 32 stocks. The top 10 holdings represent 36.4% of the portfolio and the fund’s total expense ratio stands at 0.40%. On March 21, the fund announced a quarterly dividend of $0.3257, up 52% from the previous dividend.
American Tower Corporation (NYSE:AMT) is the largest holding of Invesco S&P 500 Equal Weight Real Estate ETF (NYSE:EWRE), which mainly invests in wireless and broadcast communications infrastructure. In Q1 2022, the company showed growth in its total revenue and property revenue by 23.2% and 22.1%, respectively. Moreover, its net income also increased by 7.7% to $703 million.
On June 6, BofA initiated its coverage of American Tower Corporation (NYSE:AMT) with a Buy rating and a $315 price target. The firm appreciated the company’s non-binding agreement in its data center business, valued at over $2.5 billion. In May, the company also announced a 2% increase in its quarterly dividend to $1.43 per share, with a dividend yield of 2.37%, as of the close of June 13.
As per Insider Monkey’s Q1 2022 database, 50 hedge funds tracked by Insider Monkey owned stakes in American Tower Corporation (NYSE:AMT), down from 53 in the previous quarter. The consolidated value of these stakes is over $4.1 billion.
Qualivian Investment Partners mentioned American Tower Corporation (NYSE:AMT) in its Q3 2021 investor letter. Here is what the firm has to say:
“What Attracts Us
• High barriers to entry resulting from low bargaining power of suppliers (land owners) and customers (wireless companies). Neither can find reasonable substitutes for existing cell towers. Combined with low possibility of disruption, this results in a business oligopoly and pricing power.
• Stable business with consistent high returns on equity, low maintenance capital required, and strong cash generation.
− Ten-year, non-cancelable contracts with built in pricing escalators and high renewal rates
− 1%-2% churn
Superior Reinvestment Opportunities:
• Strong growth for the foreseeable future due to increasing demand for wireless data usage, resulting in wireless carriers Capex equipment spend on existing and new towers.
• Low maintenance capital expenditure requirements; most of capital expenditure is for growth
Superior Management / Capital Allocation:
• Capital reinvested back in business has had returns well above cost of capital
• Company has purchased stock opportunistically…” (Click here to see the full text)
6. Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE:SRVR)
Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSE:SRVR) is a strategy-driven ETF that invests in infrastructure and data REITs. The fund aims to provide exposure to the investors in the global developed markets that generate their revenues from the real estate sector. As of June, the fund has 24 securities in its portfolio, with net assets of over $1.2 billion. The top 10 holdings account for 78.7% of the fund’s portfolio.
A California-based REIT, Equinix, Inc. (NASDAQ:EQIX) is the third-largest holding of the fund. It invests in data centers and recently announced the acquisition of four data centers in Chile while agreeing to acquire one additional data center in Peru. In February, the company announced an 8% hike in its quarterly dividend to $3.10 per share, with a yield of 1.99%, as of June 13. In Q1 2022, Equinix, Inc. (NASDAQ:EQIX) posted revenue of $1.7 billion, up 6.3% from the same period last year. Moreover, its FFO of $7.16 beat market estimates by $2.39.
In April, JPMorgan appreciated the hybrid cloud architecture of Equinix, Inc. (NASDAQ:EQIX) and lifted its price target on the stock to $880, with an Overweight rating on the shares.
REIT stocks are gaining traction thanks to their high dividend yields as tech stocks like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) continue to falter in 2022.
According to Insider Monkey’s Q1 database, Equinix, Inc. (NASDAQ:EQIX) was a part of 40 hedge fund portfolios, compared with 45 a quarter earlier. These hedge funds hold a collective stake of over $1.2 billion in the company. Impax Asset Management held a stake worth roughly $491 million in the company, becoming its largest stakeholder in Q1.
Baron Funds mentioned Equinix, Inc. (NASDAQ:EQIX) in its Q2 2021 investor letter. Here is what the firm has to say:
“The shares of Equinix, Inc. gained 18% in the most recent quarter. Equinix is the premier global data center company in the world. We believe the company is exceptionally well positioned to continue to benefit from powerful secular demand trends including strong growth in information technology outsourcing, increased cloud computing adoption, multi-year increases in mobile data traffic, global internet traffic, and the number of connected devices.”
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Disclosure. None. 10 Best REIT ETFs to Buy Now is originally published on Insider Monkey.