Real estate investment trusts (REITs) own or operate income-producing real estate like apartments, hotels, malls, warehouses, and storage facilities. A company has to adhere to many standards and conditions before qualifying as a REIT. For example, you can purchase REIT stock like how you would purchase regular stocks, bonds, or mutual funds. There are three main types of REITs – equity, mortgage, and hybrid and each can be purchased through publicly-traded REITs, non-traded REITs, and private REITs.

Benefits of investing in REITs
REITs provide a profitable opportunity for those who want to widen their investment portfolio over and above mutual funds and stocks. REITs offer high dividends, allow for greater liquidity, and are available to large and small investors with brokerage accounts. REIT is ideal for those with limited capital but gives scope for earning passive income. On average, REITs have a return of 9.09%. Since REITs must pay at least 90% of their income in dividends, it generates higher dividend income than other investments. Investors can also get tax benefits from income received from REITs. One of the biggest attractions of REITs is that they are less volatile than traditional stocks.

Top REIT to invest
The price-to-earnings ratio measures a company’s current share price in relation to its earnings per share (EPS). REITs with the lowest 12-month trailing PE ratio are considered best value REITs as a low PE ratio indicates that the company pays less for each dollar of profit they earn. Some of the best-valued REITs are:

Prologis
Prologis has a market value of $109.5 billion and is one of the few REITs that attracted analyst upgrades. It owns logistics real estate across the U.S., Europe, and Asia, including 1.2 billion square feet of warehouses and about 227 million square feet of new leasing space. Their earnings have risen by about 22% over the last five years. Prologis has an A credit rating and has hiked dividends by 11.5% annually.

Public storage
Public storage is America’s largest brand of self-storage services, with a presence in about 40 states. It works in a recession-resistant segment with a market value of $52.6 billion. It has 2800 facilities, about 200 million square feet of space it can rent, and an A2 credit rating. The company had a six-fold increase in EPS in the third quarter of 2022. It recently rewarded its investors with a special dividend of $13.15 per share.

American tower
American Tower owns more than 223,000 cell towers on six continents. Their main customers are 5G carriers who lease space on these towers. Their REITs dividends have increased 20% annually, with a projected 18% annual growth till 2025.

Simon Property Group Inc
Simon Property is a retail REIT that owns, develops, and manages regional malls, outlets, lifestyle, and community centers. Their market value is about $32.6 billion. SPG REITs have been consistently rated as one of the top REITs as they perform well despite inflation, with their highest dividend yield at 5.9%.

Alexandria Real Estate Equities
Alexandria Real Estate Equities is a life science REIT specializing in office space for science and technology companies. Their tenants are mostly global pharma, biotech companies, life science device makers, and government labs. Their FFO grew by 9.2 percent in the third quarter of 2022 and is currently trading at 23 times its forward-adjusted FFO. Its dividend has grown at 6.6% annually for the last five years.

Essex Property Trust
Essex Property Trust has shown steady growth despite tech layoffs. They own 62,000 apartments spread across West Coast markets and pay a 4.1% dividend. Their dividend has grown by 5% yearly, and their stocks are currently at 15 times forward FFO.

VICI Properties
VICI Properties owned and acquired real estate in gaming, hospitality, entertainment, and leisure destinations and was one of the fastest REITs to get S&P 500 inclusion in 2022.