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Real Estate Investment Trusts (REITs) continue to be a reliable source of passive income and long-term capital appreciation. However, not all REIT stocks are created equal. To help you make an informed decision, this guide evaluates the top performing REIT stocks for 2025, covering historical performance, growth potential, insider trading activity, and much more.
Key REIT Metrics Defined
What do these metrics mean?
- REIT (Real Estate Investment Trust): REIT stocks are company’s that own or finance income producing real estate, distributing most of its earnings as dividends.
- FFO (Funds from Operations): Measures cash flow generated by core operations, excluding gains/losses from property sales.
- AFFO (Adjusted Funds from Operations): A refined version of FFO, accounting for recurring capital expenditures, providing a better view of dividend sustainability for REIT stocks vs more conventional stocks.
- NOI (Net Operating Income): The profitability of properties after deducting operating expenses, excluding financing costs.
- WALE (Weighted Average Lease Expiry): A measure of income stability; longer WALE indicates steady cash flow.
- Debt-to-Equity Ratio: A financial leverage ratio, with lower values signifying conservative debt management.
- Payout Ratio: The percentage of FFO or AFFO paid as dividends; ideal is around 70-80%.
1. Prologis Inc. (NYSE: PLD)
- Sector: Industrial
- Focus: Warehousing, logistics, and distribution centers.
Detailed Analysis
- Historical Performance: Delivered consistent annual returns of 15% over the past decade, excelling in the industrial REIT sector.
- Growth Potential: Strong, with e-commerce expansion fueling 8.5% FFO growth in 2025.
- Insider Activity: Neutral; no major buying or selling in the last year.
- Debt Metrics: Conservative with a debt-to-equity ratio of 0.58, indicating low financial risk.
- Occupancy Rate: Outstanding at 98.3%, backed by high demand for logistics properties.
- Dividend Yield: 2.9%, with a sustainable 67% payout ratio.
2. American Tower Corporation (NYSE: AMT)
- Sector: Infrastructure (Telecom Towers)
- Focus: 5G infrastructure and broadband expansion.
Detailed Analysis
- Historical Performance: Steady returns of 12% annually over the past decade.
- Growth Potential: Moderate, with 7% FFO growth driven by increasing global data demand.
- Insider Activity: Slightly positive; $5 million in insider purchases during Q3 2024.
- Debt Metrics: High leverage with a debt-to-equity ratio of 1.91, mitigated by robust cash flows.
- Occupancy Rate: Near-perfect at 99%, supported by long-term contracts.
- Dividend Yield: 3.3%, with a manageable 80% payout ratio.
3. Realty Income Corporation (NYSE: O)
- Sector: Retail
- Focus: Triple-net lease properties for retail and commercial tenants. (Fun fact: They have patented the phrase “the monthly dividend company” as one of the most famous REIT stocks)
Detailed Analysis
- Historical Performance: Consistently strong, averaging 10% annual returns, earning its nickname as “The Monthly Dividend Company.”
- Growth Potential: Modest, with 3.8% AFFO growth forecasted for 2025.
- Insider Activity: Neutral, with no significant transactions recently.
- Debt Metrics: Balanced at a debt-to-equity ratio of 0.77.
- Occupancy Rate: Excellent at 98.9%, reflecting strong tenant agreements.
- Dividend Yield: 5.1%, backed by a sustainable 75% payout ratio.
4. Simon Property Group (NYSE: SPG)
- Sector: Retail (Malls and Mixed-Use Properties)
- Focus: Luxury malls, outlet centers, and entertainment spaces.
Detailed Analysis
- Historical Performance: Volatile but averaged a 7% annualized return since 2015.
- Growth Potential: Moderate, with 5.5% FFO growth fueled by diversification into mixed-use developments.
- Insider Activity: Positive; $2 million in insider purchases in late 2024.
- Debt Metrics: Aggressive at a 7.2 debt-to-equity ratio, reflecting expansion initiatives.
- Occupancy Rate: 94%, slightly lower due to retail sector volatility.
- Dividend Yield: A high 6.2%, balancing risk and reward.
5. VICI Properties (NYSE: VICI)
- Sector: Gaming & Hospitality
- Focus: Inflation-linked leases with premier gaming operators.
Detailed Analysis
- Historical Performance: Exceptional, achieving a 13.5% CAGR since its 2018 IPO.
- Growth Potential: Strong, with 9.8% FFO growth expected in 2025.
- Insider Activity: Very positive; insiders purchased $8 million in shares during Q4 2024.
- Debt Metrics: Moderate with a 1.44 debt-to-equity ratio.
- Occupancy Rate: Perfect at 100%, with a 13.8-year WALE, ensuring stability.
- Dividend Yield: 5.0%, with potential for increases.
6. Equinix Inc. (NASDAQ: EQIX)
- Sector: Data Centers
- Focus: Global data center infrastructure for cloud and IT services.
Detailed Analysis
- Historical Performance: Industry-leading, delivering a 14% annualized return over the last 15 years.
- Growth Potential: Moderate, with 4.2% AFFO growth projected for 2025.
- Insider Activity: Neutral; no significant insider buying or selling.
- Debt Metrics: Moderate, with a 1.5 debt-to-equity ratio.
- Occupancy Rate: Solid at 97.2%, supported by long-term contracts.
- Dividend Yield: 1.7%, with a 60% payout ratio, favoring reinvestment for growth.
Expanded Comparison Table of REIT stocks
| Metric | PLD | AMT | O | SPG | VICI | EQIX |
|---|---|---|---|---|---|---|
| Sector | Industrial | Telecom | Retail | Retail | Gaming | Data Centers |
| Historical Return (10Y) | 15% | 12% | 10% | 7% | 13.5% | 14% |
| Dividend Yield | 2.9% | 3.3% | 5.1% | 6.2% | 5.0% | 1.7% |
| FFO Growth | 8.5% | 7.0% | 3.8% | 5.5% | 9.8% | 4.2% |
| Occupancy Rate | 98.3% | 99% | 98.9% | 94% | 100% | 97.2% |
| Debt-to-Equity Ratio | 0.58 | 1.91 | 0.77 | 7.2 | 1.44 | 1.5 |
| WALE | 5.9 yrs | 6.2 yrs | 7.4 yrs | 6.0 yrs | 13.8 yrs | 9.5 yrs |
| Insider Activity | Neutral | Slight Buy | Neutral | Buy | Strong Buy | Neutral |
Final Thoughts: Which REIT Stock Should You Choose?
Choosing the best REIT depends on your investment goals. For high growth, Equinix (EQIX) is unparalleled. For stable income, Realty Income (O) and Simon Property Group (SPG) are excellent choices. Investors seeking resilience and global exposure might prefer Prologis (PLD) or American Tower (AMT).
- Best for Stability: Prologis (PLD)
- Best for Dividend Income: Realty Income (O) and Simon Property Group (SPG)
- Best for Growth Potential: Equinix (EQIX) and VICI Properties (VICI)
When selecting a REIT, consider your investment goals and risk tolerance. A well-diversified REIT portfolio can help balance income, growth, and risk.
Pro Tip: Diversifying your REIT holdings across sectors like industrial, retail, and data centers can mitigate risks and optimise returns.
If you enjoyed this article on REIT stocks, you may also like this analysis on one of my favourite growth stocks.
Also, feel free to try out this free FFO and AFFO calculator I built for you to use and evaluate REITs.
Disclaimer: Remember this is not financial advice, you should always do your own research when investing in stocks, this is not financial advice.
