Owning a single rental property is great. But what if you could get most of the advantages of real estate investing by simply choosing the best real estate stocks for your portfolio? Real estate stocks are stocks related to the real estate market -- they might be real estate investment trusts (REITs), homebuilders, or real estate companies, but they are all in the industry.
There are many advantages to owning real estate stocks over real property, especially when it comes to eliminating the hassle of hands-on management. But there are a lot of real estate stocks to choose from, too. So, how can you even begin to pick among them?
Six best real estate stocks
Six best real estate stocks in 2025
Here are some real estate stocks to watch for the long term:
| Company name | Company ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|---|
| Mid-America Apartment Communities | NYSE:MAA | $15 billion | 5.70% | Residential REITs |
| UMH Properties | NYSE:UMH | $1 billion | 6.11% | Residential REITs |
| Lennar | NYSE:LEN | $31 billion | 1.63% | Household Durables |
| LGI Homes | NASDAQ:LGIH | $1 billion | 0.00% | Household Durables |
| Equity Residential | NYSE:EQR | $24 billion | 4.43% | Residential REITs |
| CoStar Group | NASDAQ:CSGP | $32 billion | 0.00% | Real Estate Management and Development |
Stocks 1 - 3
1. Mid-America Apartment Communities
Perhaps the most remarkable thing about Mid-America Apartment Communities (MAA -0.09%), however, is its commitment to redevelopment and adding value to units it already holds rather than selling off aging ones. During 2024, the company renovated the kitchens and bathrooms of 5,665 apartments, increasing the average rental rate of each unit by 7.3% when compared to similar but non-renovated units.
Its practices are a solid way to conserve a limited supply of apartments and are low-cost methods for increasing per-unit value without constantly buying and selling real estate -- a costly venture on its own. After all, the more spent, the lower the return REIT investors receive each year. Responsible conservatorship is also evident in the company's dividend, which has not fallen since it was first offered in 1994.
2. UMH Properties
UMH Properties (UMH -0.55%) is a REIT that has been in the manufactured home business since 1968 and has been publicly traded since 1985. It holds approximately 10,600 individual manufactured rental homes in 144 communities. The company added 394 rental units and 493 homesites during the year ended Dec. 31, 2024.
UMH also sells manufactured homes to occupants. It sold 394 in the year ending Dec. 31, 2024, and is receiving rents for the lots on which the units sit (and those sold in previous years).
At the end of 2024, UMH held $1.56 billion in assets, with $485 million in mortgage debt. UMH offers affordable site rent and overall rent for single-family housing, which is likely to remain in high demand as the cost of stick-built, single-family residential homes continues to remain out of reach for many.
3. Lennar
Lennar (LEN 0.17%) is one of the largest builders of single-family homes in the U.S. It reported revenues of $35.4 billion in 2024 after delivering more than 80,000 homes during the calendar year. It also kicked off 2025 solidly with $8.37 billion in revenues for the three months ended May 31, 2025.
Although building homes is its primary focus, Lennar also offers Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) home loans to its homebuyers through its subsidiary Lennar Mortgage. It also offers title insurance and closing services in 18 states.
Homebuilders are seeing a dip in demand from 2024, and that's apparent in Lennar's revenues. However, the company is stepping up its multifamily game, increasing those revenues from $99 million in the three months ending May 31, 2024, to $230 million in the three months ending May 31, 2025.
Due to its willingness to experiment, Lennar has generally carried decent debt-to-asset ratios. In 2023, it had $39.2 billion in assets versus $12.5 billion in liabilities. This ratio has dropped somewhat as of May 31, 2024, with Lennar holding $41.3 billion in assets and $13.3 billion in liabilities.
Stocks 4 - 6
4. LGI Homes
LGI Homes (LGIH -0.41%) is a growing mid-sized builder that focuses its efforts and marketing on first-time homebuyers. For the year ending Dec. 31, 2024, the average price of a home produced and sold by LGI was $365,394. That's a significant discount from the median existing-home price of $419,300 in the fourth quarter of 2024, according to the Federal Reserve Bank of St. Louis.
Pricing alone gives LGI a distinct advantage in its market, but that's not the whole story behind the company. LGI finished 2024 with $3.7 billion in assets and $1.7 billion in liabilities. Despite the rocky environment for homebuilders, LGI has also seen a decline in contract cancellations in 2024 of 22.8%, to a rate below that of 2022, which was 24.4%.
Between December 2013 and December 2024, LGI grew from eight markets in four states to 36 markets in 21 states -- and it continues to build steam.
5. Equity Residential
Equity Residential REIT (EQR -0.34%) is an apartment REIT that's not only committed to providing quality apartment living to residents in major urban areas but also has shown a strong commitment to sustainability. The company recently became the first residential REIT to be included in the Dow Jones Sustainability World and North America Indices.
Equity Residential was able to produce significant gains in normalized funds from operations (FFO) per share in 2024 of $3.89 versus $3.78 in 2023. Its more than 84,000 units averaged $3,056 per month rental rate in 2024, and the company held $20.8 billion in assets and only $9.2 billion in liabilities at the end of fiscal year 2024. Despite stiff competition in some of the most difficult real estate rental markets in the country, Equity Residential managed to achieve an occupancy rate of 96.2% in 2024.
6. CoStar Group
Unlike the other real estate companies included in this list, CoStar Group (CSGP -0.67%) doesn't actually deal in real estate. What it sells is information on the commercial real estate market. Using advanced data analytics, it's managed to dig itself a deep moat, delivering 57 consecutive quarters of double-digit revenue growth as of the second quarter of 2025. It owns familiar brands like Apartments.com and LoopNet.
Net income dropped significantly in fiscal year 2024, from $374.7 million in 2023 to $138.7 million in 2024, but this may be due to the slowing real estate market and the increase in the cost of almost everything. Despite these hurdles, at the end of 2024, CoStar had increased its assets to $9.256 billion from $8.9 billion in 2023, while maintaining liabilities totaling only about $1.7 billion.
Pros and cons
Pros and cons of investing in real estate stocks
Owning real estate stocks comes with benefits and drawbacks, like any stock. But when it comes to real estate stocks, the biggest benefits are that you're owning managed properties or companies that deal in the real estate industry, as opposed to owning and operating these companies yourself. It can seem like a great way to earn passive income to buy some rentals, for example, but it's actually a great deal of work, and buying some solid REITs instead will free your time up.
On the other hand, owning real estate stocks also leaves you at the mercy of the management team of the companies you're invested in. So, you really have to know and trust those people to perform well. Owning real estate stocks versus other types of stocks also exposes you to the cyclic nature of real estate, so you have to be prepared for ups and downs.
Criteria for choosing stocks
Criteria to choose real estate stocks
It's important to carefully choose your real estate stocks, since there are so many available and they can't all be winners. Different types of real estate stocks will have different metrics to examine, but for all of them, it's important to first understand the business they're in, be it a REIT, a homebuilder, a real estate company, or something else, so you can really think about the criteria that matter the most to you.
For example, with a REIT, it's important to look at how much debt the company has compared to its assets and income. REITs will have debt, especially if they're in a building phase, but more than about a 40% debt-to-asset ratio is where things may get dicey. If the market were to dry up, they would need to be able to still pay their bills. You can judge how their income looks by examining funds from operations (FFO) -- in fact, REITs are often evaluated by a metric called FFO Per Share.
Other companies, like home builders, may have a lot of inventory that you should carefully examine. If a home builder has more homes than they can sell, this could be a sign that deep discounting is coming and losses may follow.
Real estate companies largely operate on commissions, so it's important to know the number of agents in the company, their income streams, and the reliability of their income streams. For example, if a real estate company primarily works with residential clients, the number of new listings it can produce and close consistently will figure into its overall performance; one that simply does property management only needs steady, long-term clients.
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The bottom line
There are plenty of ways to invest in real estate besides owning physical real estate assets. For many investors, real estate stocks can make all the best parts of owning real estate much more accessible and far less expensive. Whether you're interested in investing in apartment REITs or the builders who construct owner-occupied neighborhoods, there are lots of offerings on the table.
When evaluating real estate stocks, remember that many of the same rules apply as they would for any kind of stock. Look for companies with great offerings, whether it's leasable real estate or purchasable housing stock.
Make sure they aren't carrying a high level of debt that could become a serious liability in a downturn. The better they are at managing their money, the better off you'll be. And, if the management team happens to own a big chunk of the company, that's pretty solid evidence they're invested in making their company succeed by tying their own futures to that success.
FAQ
Best real estate stocks FAQ
Which real estate stock pays the highest dividend?
REITs as a group are required to pay out 90% of their taxable income as dividends, so they are always a solid bet for dividend income. Their yield is based on their dividend compared to the stock's price each day. Some will pay very high dividends, easily into the double digits, but you have to consider if these are really sustainable for the long term. Often, the high dividend yield is due to a lack of conviction on the part of the market. Instead of looking for the highest dividend, look for solid companies that pay sustainable dividends.
How do real estate stocks perform during a recession?
Real estate stocks in general often don't perform well during a recession, but it really depends on the sector and type of stock. If the company has a solid client base and provides a service or type of real estate that is always in demand, it will fare much better than one that is in a more discretionary market.
Can I invest in real estate stocks with little money?
You absolutely can. Many REITs have shares priced in the double digits, and even if they don't, you can still buy fractional shares through your favorite stock brokerage. REITs are bought just like stocks, and are just as easy to dispose of, making them a great place for people to park their money if they want to diversify into real estate.
