Most investors view a real estate investment trust, or REIT, as a safe investment. These companies typically generate stable rental income, enabling them to pay out attractive dividends.
However, not all REIT stocks are safe investments. Many have had to reduce or suspend their dividend payments during market downturns because they didn't have enough financial flexibility to maintain them. Some have put themselves in such poor financial positions that they've struggled to survive.
An investor needs to carefully consider the safety of a REIT before buying shares. Here's a look at the hallmarks of the safest REITs as well as three top ones to buy right now.
What makes a REIT safe?
The safest REITs share many common characteristics. Three factors stand out as being important to dividend safety:
- An investment-grade credit rating backed by low leverage metrics. Debt financing is crucial in real estate. It's much easier to access funding with lower interest rates if a REIT has an investment-grade credit rating backed by low leverage, such as a debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of less than 6.0 times. The higher the credit rating and the lower the leverage ratio, the safer the REIT.
- A conservative dividend payout ratio. REITs must distribute at least 90% of their net income to remain compliant with IRS regulations. However, many pay more than 100% of their taxable income because they generate more cash flow -- measured by metrics like funds from operations, or FFO -- than net income because of depreciation. REITs still need to keep their FFO payout ratio to a conservative level, ideally less than 75%.
- A high-quality commercial real estate portfolio leased to credit-worthy tenants. Rental payments are the lifeblood of REIT dividends, so REITs need to own properties with high rental demand and lease their space to tenants that can afford to pay their rents.
REITs that boast of having all three of these characteristics will be much safer than rivals lacking one or more of these traits, so they should pay a secure dividend while also offering consistent dividend growth.
Top safe REITs
With these characteristics in mind, here's a closer look at three of the safest REITs:
1. Realty Income
NYSE: O
Key Data Points
It is hard not to like Realty Income (O +0.40%). It is the largest net lease REIT around, with a portfolio that contains more than 15,600 properties. It focuses on retail, industrial, gaming, and other properties (like data centers). It leases these properties to high-quality tenants under long-term, net lease agreements. Those leases require that tenants cover all operating expenses, including routine maintenance, building insurance, and real estate taxes. As a result, the REIT generates a very stable rental income.
The REIT pays out less than three-quarters of its FFO in dividends. That's a conservative level for a REIT. Realty Income also has one of the 10 best balance sheets in the sector by credit rating (A3/A-). Its strong financial profile makes Realty Income an extremely safe REIT.
They also enable Realty Income to routinely increase its dividend. As of mid-2025, the REIT had increased its dividend for 30 straight years (and more than 110 quarters in a row). Realty Income's strong financial profile has given it the flexibility to invest in additional income-producing properties, which grow its FFO per share to support dividend increases.
2. Mid-America Apartment Communities
NYSE: MAA
Key Data Points
3. Prologis
NYSE: PLD
Key Data Points
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Built on a strong foundation
The safest REITs share one thing in common. They have very strong financial profiles, giving them the financial flexibility to continue growing their dividends and real estate portfolios throughout the real estate cycle. Continued expansion should enable them to grow shareholder value while taking on much less risk than others in the sector. The ability to earn a solid return with less risk makes them great REITs to buy for the very long term.
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