Best REITs to Invest In: Top Picks for 2025 and Why You Should Consider Them

Investing in Real Estate Investment Trusts (REITs) offers an accessible way to benefit from the real estate market without the complexities of directly owning property. REITs are companies that own, operate, or finance income-producing real estate, and they allow investors to gain exposure to real estate without the hassle of property management. With the potential for attractive returns, tax benefits, and portfolio diversification, REITs have become a popular choice for both seasoned investors and beginners alike.

In this article, we’ll explore some of the best REITs to invest in for 2025, their potential benefits, and why they’re considered a solid investment option.

Why Should You Invest in REITs?

1. Passive Income
   REITs are required by law to distribute at least 90% of their taxable income as dividends to shareholders. This means they offer a consistent stream of revenue, making them attractive for investors seeking passive income.
2. Diversification
   By investing in REITs, you gain exposure to real estate across various sectors—commercial, residential, healthcare, and industrial. This helps diversify your investment portfolio, reducing risk and increasing stability.
3. Liquidity
   Unlike direct real estate investments, REITs can be bought and sold on major stock exchanges, offering higher liquidity compared to physical real estate.
4. Long-Term Growth Potential
   REITs often invest in high-quality properties in prime locations, providing long-term growth potential. In addition, many REITs are focused on growing their portfolio, giving capital appreciation alongside regular dividend payments.
5. Tax Efficiency
   REITs are generally tax-advantaged due to their special structure. By passing on most of their profits to shareholders, they are exempt from paying corporate taxes, which makes them an efficient way to gain real estate exposure.

To learn how to effectively manage an investment portfolio, explore our Complete Guide to Managing Investment Portfolios.

Current REIT Market Outlook for 2025

Strong Performance Momentum

REITs have demonstrated resilience through market volatility, with the FTSE Nareit All Equity REITs Index posting modest gains year-to-date. The sector benefits from several tailwinds, including stable commercial real estate fundamentals, with same-store net operating income (NOI) growth projected at approximately 3% in 2025. This growth rate outpaces the 2.4% inflation rate, demonstrating REITs' ability to maintain pricing power.

Key Performance Drivers

Analysts expect REITs to benefit from improved transaction activity as private market conditions stabilize. J.P. Morgan Research anticipates funds from operations (FFO) growth of 3% in 2025, accelerating to nearly 6% in 2026 as investment opportunities increase. The combination of 4% dividend yields, low-to-mid-single-digit FFO growth, and potential valuation expansion could result in approximately 10% total returns.

Top Sector Performers in 2025

Healthcare REITs: Defensive Leaders

Healthcare REITs have emerged as one of the top-performing sectors, posting returns of 8.5% through May 2025. The sector benefits from favorable supply/demand dynamics, demographic tailwinds from an aging population, and recession-resilient characteristics. Senior housing and skilled nursing facilities offer desirable opportunities given the growing 80+ population cohort.

Data Center REITs: AI-Driven Growth

Data center REITs continue experiencing unprecedented demand driven by artificial intelligence, cloud computing, and digital transformation initiatives. Despite power supply constraints, the sector maintains robust fundamentals with most available space pre-leased through 2027. Hyperscaler investments in AI infrastructure provide sustained demand visibility.

Industrial REITs: Strategic Positioning

While facing near-term headwinds from policy uncertainty, industrial REITs remain well-positioned for long-term growth. Net effective market rents are projected to decline approximately 5% in 2025 before returning to positive growth in 2026 and inflationary growth by 2027. REITs with strong balance sheets can capitalize on acquisition opportunities during market dislocations.

Best Individual REIT Picks for 2025

Blue-Chip REIT Leaders

Prologis (PLD)

• Sector: Industrial Logistics
• Dividend Yield: 3.8%
• Investment Thesis: As the world's largest industrial REIT, Prologis operates 5,900 warehouses across 20 countries, serving 6,500 customers. The company benefits from strategic locations in key transportation hubs and has demonstrated pricing power with rent spreads increasing 67% in Q3 2024. Analysts maintain a "buy" rating with a fair value estimate of $125 per share.

Realty Income Corporation (O)

• Sector: Net Lease Retail
• Dividend Yield: 5.6%
• Investment Thesis: Known as "The Monthly Dividend Company," Realty Income owns over 15,600 single-tenant, triple-net-lease properties. The REIT has increased its dividend for 30 consecutive years and maintains an investment-grade credit rating. With 73% of rental income from defensive retail segments, it offers stability and consistent income generation.

To explore top-performing industrial real estate investment trusts (REITs) and gain insights into the sector's growth, visit this comprehensive guide: Top Performing Industrial Real Estate Investment Trusts.

American Tower Corporation (AMT)

• Sector: Communications Infrastructure
• Dividend Yield: 3.1%
• Investment Thesis: Operating the world's most extensive independent portfolio of wireless communication towers with over 149,000 sites globally. American Tower benefits from 5G deployment and international expansion, particularly in Africa and Europe. The company generates $4.7 billion in adjusted FFO annually while investing in growth initiatives.

High-Growth Specialty REITs

Digital Realty Trust (DLR)

• Sector: Data Centers
• Dividend Yield: 3.4%
• Investment Thesis: A premier digital infrastructure REIT with global presence serving enterprise customers and hyperscalers. Bank of America named Digital Realty as its top data center REIT pick for 2025. The company's extensive customer base of over 5,000 enterprises positions it well for AI-driven demand growth.

Equinix (EQIX)

• Sector: Data Centers/Colocation
• Investment Thesis: Operating one of the world's most extensive interconnected data center networks, Equinix serves over 10,000 customers globally. The company's software-driven networking fabrics and edge computing capabilities position it advantageously for AI inference workloads.

AvalonBay Communities (AVB)

• Sector: Multifamily Residential
• Dividend Yield: 3.4%
• Investment Thesis: Mizuho Securities named AvalonBay as their top apartment REIT pick for 2025. The company plans to increase apartment construction by 50% in 2025, capitalizing on lower capital costs relative to competitors. AvalonBay focuses on high-quality properties in attractive coastal markets with favorable demographics.

Income-Focused Selections

Crown Castle (CCI)

• Sector: Wireless Infrastructure
• Dividend Yield: 4.1%
• Investment Thesis: Operating wireless communication towers with the highest dividend yield among quality REITs on this list. The company's decision to divest fiber operations to focus on core tower assets should improve capital allocation efficiency.

Welltower (WELL)

• Sector: Healthcare
• Dividend Yield: 3.0%
• Investment Thesis: A leading healthcare REIT benefiting from aging demographics and the growing need for senior housing and medical facilities. The company's partnerships with top-tier operators and technology investments position it for sustainable growth.