What are REITs and how do they work?

REITs (Real Estate Investment Trusts) are companies that own, operate, or finance income-producing real estate. They work similar to mutual funds by pooling investor money to purchase properties. By law, REITs must distribute at least 90% of their taxable income as dividends to shareholders, making them popular for income-focused investors. REITs let you invest in real estate without buying physical property, offering both regular income and potential appreciation.

Why are data centers considered real estate investments?

Data centers are specialized buildings designed to house computer systems and related equipment. They're considered real estate investments because companies like Equinix and Digital Realty own the physical buildings and land, then lease this space to businesses needing to store and process data. As our digital economy grows, these properties have become increasingly valuable, combining traditional real estate ownership with technology sector growth.

How can real estate stocks help protect against inflation?

Real estate stocks can help protect against inflation because property values and rental income typically increase during inflationary periods. As the cost of building materials rises, existing properties become more valuable. Additionally, many commercial leases include inflation-adjusted rent increases. REITs and other real estate companies can pass these higher rents to investors through dividends, helping your investment returns keep pace with or exceed inflation.

What's the difference between commercial and residential real estate stocks?

Commercial real estate stocks focus on properties used for business purposes, like office buildings, shopping centers, hotels, and warehouses. Companies like SPG (Simon Property Group) own shopping malls, while PLD (Prologis) specializes in logistics facilities. Residential real estate stocks invest in housing properties where people live, such as apartment complexes and single-family rental homes. EQR (Equity Residential) and AVB (AvalonBay) are examples that own and manage apartment communities. Each type has different risk profiles, income potential, and responds differently to economic changes.

20 handpicked stocks

Real Estate

Is it sunset or sunrise for real estate stocks? This carefully selected group of property investments, handpicked by our professional analysts, offers exposure to everything from data centers to residential properties and commercial real estate trusts.

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Han Tan | Market Analyst

Updated 2 days ago | Published at mai 29