Investing in real estate investment trusts (REITs) can be a lucrative way to generate passive income. Over the past year, REITs have seen a significant increase in share prices, with returns up by almost 40%. But which REITs are the best long-term investments? In this article, we will explore the top residential and apartment REITs that have the potential to produce the highest dividend yields.
Camden Property Trust (NYSE: CPT)
One of the leading multifamily apartment REITs is Camden Property Trust. Founded in 1981, Camden owns, manages, and develops apartment buildings and units across the United States. With a portfolio of over 165 apartment communities and more than 59,000 apartment units, Camden is a dominant player in the industry.
Camden Property Trust has been recognized for its excellence as a company, consistently making Fortune's list of 100 best companies to work for. Share prices have shown a steady climb over the past year, and the company boasts an excellent dividend yield. With a strong financial profile and a dividend payment ratio of less than 60% of its estimated funds from operations (FFO) for 2022, Camden Property Trust offers one of the most secure dividend yields in the REIT sector.
Camden Property Trust - One of the Best Apartment REITs
AvalonBay Communities, Inc. (NYSE: AVB)
AvalonBay Communities is another major player in the multifamily housing and apartment REIT space. With nearly 88,000 apartment units in 297 communities across the United States, AvalonBay has a strong presence in cities like New York City, Washington DC, and San Francisco.
The diversification of AvalonBay's portfolio across different states and cities allows for consistent profits even in challenging market conditions. Share prices have seen a 30% increase over the past year, and AvalonBay Communities currently offers a high dividend yield of 2.59%. The company's positive growth is evident in its 13% rise in same-store residential rental earnings for the two months leading up to May 31, 2022.
AvalonBay Communities - A Diverse and Profitable REIT
Invitation Homes Inc. (NYSE: INVH)
If you're interested in single-family home rental properties, Invitation Homes is the largest owner of such properties in the US. With approximately 80,000 single-family homes across 16 cities, Invitation Homes aims to provide a worry-free rental experience with exceptional customer service and 24/7 emergency maintenance.
Invitation Homes has seen positive growth over the past year, with share prices up 30% overall. The demand for houses in the southern United States has given Invitation Homes a competitive edge, and the company is expected to benefit from the projected increase in single-family home rents throughout 2022. With a resident retention rate of nearly 80% and a solid dividend yield of 2.89%, Invitation Homes offers both stability and growth potential.
Invitation Homes - The Largest Single-Family Home Rental REIT
American Homes 4 Rent (NYSE: AMH)
American Homes 4 Rent focuses on single-family home rentals and has a diverse portfolio of over 55,000 homes across 22 states. The company targets move-in-ready homes in select neighborhoods with good schools, and many of their properties come with a list of amenities to attract renters.
Share prices have remained stable over the past month, and American Homes 4 Rent is currently just below its all-time high. The company reported a 13.9% increase in rental income for the first quarter of 2022, showcasing its strong financial performance. With a dividend yield of 1.83%, American Homes 4 Rent offers both income and growth potential to investors.
American Homes 4 Rent - Investing in Single-Family Home Rentals
Essex Property Trust (NYSE: ESS)
Essex Property Trust, founded in 1971, is a REIT focused on multifamily apartment buildings along the West Coast. With 250 apartment complexes and 60,500 apartment units, Essex has a significant presence in the real estate market.
Essex expanded its portfolio through the acquisition of BRE properties in 2014, and currently has a market cap of $18.6 billion. The company has shown steady growth over the past year, and its share prices are just under an all-time high. With a high dividend yield of 3.10%, Essex Property Trust presents a compelling investment opportunity.
Essex Property Trust - A Strong West Coast Apartment REIT
Independence Realty Trust (NYSE: IRT)
Based in Philadelphia, Independence Realty Trust owns multifamily properties throughout the United States. The company focuses on both newer and older properties, with a strategy of renovating older properties to increase their value. Independence Realty Trust has a stable tenant base, providing stability even during market downturns.
Share prices have experienced steady growth over the past year, increasing by 70%. The company's financials have also exceeded expectations, with higher than estimated revenue and earnings per share. Independence Realty Trust offers a dividend yield of 3.4% and has recently announced a stock repurchase program worth up to $250 million. With shares currently at an all-time high, Independence Realty Trust is a solid investment choice.
Independence Realty Trust - Investing in Multifamily Properties
Apartment Investment and Management Company (NYSE: AIV)
Apartment Investment and Management Company (AIV) is one of the largest apartment-focused REITs in the country. With properties in 13 states and Washington, D.C., AIV offers a diverse portfolio catering to both urban and suburban renters.
Despite a slight fluctuation in share prices over the past year, AIV is currently 33.57% higher than in 2021. The company's financial performance has been strong, with higher than expected revenue and net income. AIV reported a total occupancy of 98.5% in its latest earnings call, generating significant revenue. With a 6.2% dividend yield, Apartment Investment and Management Company presents an attractive investment opportunity.
Apartment Investment and Management Company - A Diverse Apartment REIT
Equity Residential (NYSE: EQR)
Equity Residential is one of the largest apartment REITs in the United States, with properties in major cities like Chicago, San Francisco, and New York. The company owns or invests in over 309 properties, providing nearly 75,000 units for residents.
Equity Residential has seen some fluctuations in its earnings, but continues to be a profitable venture. The company recently reported an increase in funds from operations (FFO) per share and a rise in the value of new leases. With a 3.4% dividend yield and increased profitability, Equity Residential is an excellent choice for investors looking to earn passive income while participating in the real estate market.
Equity Residential - Investing in Major City Apartments
Mid-America Apartment Communities (NYSE: MAA)
Mid-America Apartment Communities is the largest owner of multifamily residential buildings in the United States. With nearly 300 complexes and over 101,500 units, Mid-America Apartment Communities has a strong foothold in the market.
The company also owns mixed-use commercial spaces, providing a complete community experience for its residents. Share prices have shown steady growth over the past year, increasing by 40%. With a dividend yield of 2.79%, Mid-America Apartment Communities offers both income and growth potential.
Mid-America Apartment Communities - The Largest Multifamily Residential Building Owner
American Campus Communities (NYSE: ACC)
American Campus Communities focuses on student housing, making it a unique player in the apartment REIT market. With properties on 93 different campuses and representing 203 college communities, American Campus Communities provides housing for students across the United States.
The company has experienced steady growth over the past year, with share prices increasing by 27%. With a dividend yield of 2.89% and strong financial performance, American Campus Communities is an attractive investment option. Additionally, the recent acquisition of the company by Blackstone further solidifies its potential for continued success.
American Campus Communities - Investing in Student Housing
Should You Invest in Residential and Apartment REITs?
Residential and apartment REITs have shown resilience and growth, even during uncertain times. With the world slowly returning to normal, the demand for housing is increasing, especially in urban areas. Compared to other types of REITs, such as hotels and offices, residential and apartment REITs have remained strong.
These top 10 REITs offer excellent dividend yields and potential for long-term growth. However, it's important to understand the specific attributes and risks of each REIT before investing. Conduct thorough research and consider your investment strategy before making any decisions.
Where to Buy Residential and Apartment REITs?
To invest in these REITs, you can find them on major exchanges. Platforms like Webull and Robinhood offer convenient access to these markets without any commission fees. Webull provides features to help you discover hidden gems in the stock market, while Robinhood offers a user-friendly interface for easy ticker searches.
Consider these platforms for your investment needs and start building your portfolio with residential and apartment REITs.
Final Thoughts on the Best Apartment and Residential REITs
The surge in demand for apartments and residential properties presents a favorable opportunity for investors. The stable income and growth potential offered by these REITs make them an attractive investment choice. Additionally, the majority of apartment and residential REITs provide dividend yields to shareholders, further enhancing the investment opportunity.
Keep in mind that, like all investments, there are risks involved. Conduct thorough research and stay informed about the specific attributes and performance of each REIT. With careful consideration, investing in residential and apartment REITs can be a profitable venture.
Residential and Apartment REITs FAQ
Q: Are Residential REITs a Good Investment? A: Residential REITs can be a good investment due to their stability, consistent income, and potential for capital appreciation. Long-term leases with quality tenants generate reliable cash flow, making them an attractive option.
Q: Are There Any Residential REITs? A: Yes, there are several residential REITs to consider. Some focus on apartments, while others specialize in student housing, senior living, or manufactured homes. Top residential REITs include Camden Property Trust, AvalonBay Communities, and Invitation Homes Inc.
Q: Are REITs a Good Investment in 2022? A: Yes, REITs are expected to continue their upward trend in 2022. They offer stability, income, and modest growth potential. Real estate investment trusts are highly popular and liquid investments, offering an attractive investment option.
Q: Can You Get Rich Investing in REITs? A: While it is possible to accumulate wealth through REIT investments, they are typically considered slow growers. However, the real estate sector has outperformed other sectors in recent times, with significant growth potential.
Q: Can You Lose Money in REITs? A: Investments in REITs, like any other stock or investment, come with risks. It is crucial to conduct thorough research and understand the specific attributes and performance of each REIT before investing.
