Best REIT Stocks for Investors

Seeking Alpha analysts David Johnson and REITer's Digest recommend the best REIT stocks for investors, focusing on proven track records, risk management, and strong leadership. They suggest investing in REITs with a history of success and executives who can effectively manage risk.

Real estate investment trusts (REITs) have long been favored by investors for their attractive yields and diversification potential. Exchange-traded funds (ETFs) that focus on real estate stocks provide a convenient way to gain exposure to this sector. This article explores the top REIT ETFs recommended by Morningstar for 2025, focusing on their strategies, yields, and performance.

Top REIT ETFs for 2025

1. Dimensional US Real Estate ETF (DFAR)
- Morningstar Medalist Rating: Gold
- Morningstar Category: Real Estate
- Strategy: Active, rules-based
- Yield: 2.83%
- Commentary: Dimensional US Real Estate ETF is the only Gold-rated fund on the list, following an active rules-based strategy that provides broad exposure to US REITs. It offers a competitive expense ratio and strong risk management, making it an attractive choice for investors seeking a diversified real estate portfolio.

2. Schwab US REIT ETF (SCHH)
- Morningstar Medalist Rating: Bronze
- Morningstar Category: Real Estate
- Strategy: Index, passive
- Yield: 3.15%
- Commentary: Schwab US REIT ETF tracks the Dow Jones Equity All REIT Capped Index, offering pure exposure to domestic REITs. Its low cost and well-constructed portfolio make it an excellent option for investors looking for a simple, cost-effective way to gain exposure to US real estate.

3. SPDR Dow Jones Global Real Estate ETF (RWO)
- Morningstar Medalist Rating: Bronze
- Morningstar Category: Global Real Estate
- Strategy: Index, passive
- Yield: 3.62%
- Commentary: SPDR Dow Jones Global Real Estate ETF provides global exposure to real estate stocks, with a significant portion of its portfolio invested in non-US real estate. Its low fee and broad diversification make it a strong choice for investors seeking international real estate exposure.

4. Vanguard Global ex-US Real Estate ETF (VNQI)
- Morningstar Medalist Rating: Bronze
- Morningstar Category: Global Real Estate
- Strategy: Index, passive
- Yield: 4.62%
- Commentary: Vanguard Global ex-US Real Estate ETF focuses exclusively on non-US real estate stocks, providing a high yield and geographical diversification. Its competitive expense ratio and broad portfolio make it an attractive option for investors seeking international real estate exposure.

Key Factors to Consider

Investors should consider the following factors when choosing a REIT ETF:

- Active vs. Passive: Most real estate ETFs are passive investments, tracking a particular index. However, Dimensional US Real Estate ETF is actively managed, offering a different approach to real estate investing.
- US vs. Non-US: Investors should decide whether they want to focus on US real estate or include non-US stocks in their portfolio. Non-US real estate often provides higher yields but may also come with additional risks.
- Yield: REIT ETFs offer attractive yields, with Vanguard Global ex-US Real Estate ETF providing the highest yield on the list.

Conclusion

The top REIT ETFs for 2025, as recommended by Morningstar, offer a range of strategies and exposures to suit different investor preferences. From the actively managed Dimensional US Real Estate ETF to the passive, globally diversified SPDR Dow Jones Global Real Estate ETF, these funds provide a solid foundation for investors seeking exposure to the real estate sector.

References

[1] Morningstar. (2025). Best REIT ETFs to Buy in 2025. Retrieved from https://www.morningstar.com/funds/best-reit-etfs-buy