7 Top REITs for Passive Income in 2024

What are REITs?

Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-producing real estate. They provide an accessible way for individuals to invest in large-scale, income-producing real estate without having to buy properties directly. According to the National Association of Real Estate Investment Trusts (Nareit), REITs must distribute at least 90% of their taxable income to shareholders as dividends, making them attractive for income-focused investors.

“Investing in REITs allows you to gain exposure to the real estate market without the headaches of managing properties.”

Types of REITs

• Equity REITs: Own and manage income-generating properties, such as shopping malls, apartments, and office buildings.
• Mortgage REITs (mREITs): Provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities.
• Hybrid REITs: Combine the strategies of both equity and mortgage REITs.

Why Invest in REITs for Passive Income?

Investing in REITs comes with several advantages, particularly for those seeking passive income:

1. Regular Dividends: REITs are known for their high dividend yields, often exceeding those of traditional stocks.
2. Diversification: By investing in a REIT, you gain exposure to a diversified portfolio of real estate assets, which can reduce risk.
3. Professional Management: REITs are managed by professionals, taking the burden of property management off your shoulders.
4. Liquidity: Most REITs are publicly traded, meaning you can buy and sell shares easily on the stock exchange.

“The combination of dividends and liquidity makes REITs a compelling option for investors.”

7 Top REITs for Passive Income in 2024

1. Realty Income Corporation (O)

Realty Income Corporation is famously known as “The Monthly Dividend Company.” It invests in commercial properties and is renowned for its reliability in delivering monthly dividends. As of 2023, Realty Income boasts a dividend yield of around 4.5%, making it a staple for income-focused investors.

2. Digital Realty Trust (DLR)

As the demand for data centers continues to rise, Digital Realty Trust positions itself at the forefront of this growth. With a focus on technology-related properties, DLR provides a yield of approximately 3.8%. Its strong balance sheet and consistent performance make it a solid choice for passive income.

3. Public Storage (PSA)

Public Storage is a leader in the self-storage industry, owning thousands of facilities across the United States and Europe. With a dividend yield close to 4.0%, PSA not only offers reliable income but also benefits from the growing trend of urbanization and downsizing.

4. Welltower Inc. (WELL)

Investing in senior housing and healthcare facilities, Welltower stands out as a REIT with a focus on demographic trends. As the population ages, demand for senior living is expected to rise, positioning Welltower for sustainable growth. The current yield is around 3.6%.

5. Simon Property Group (SPG)

Simon Property Group is the largest retail REIT in the U.S., owning numerous shopping malls and outlets. While retail has faced challenges, SPG has adapted by enhancing its property offerings. With a dividend yield of about 6.1%, it provides substantial income potential.

6. AvalonBay Communities (AVB)

Focusing on high-quality residential properties, AvalonBay Communities operates in some of the most desirable markets in the U.S. The company has a strong track record of dividend growth and currently offers a yield of approximately 3.4%.

7. Ventas, Inc. (VTR)

Ventas specializes in healthcare real estate, including senior housing and medical office buildings. With a strong portfolio and a yield of around 4.1%, Ventas offers a stable investment option for those interested in the healthcare sector.