Best-Performing REITs for April 2025: How to Invest in Real Estate Investment Trusts

Real estate investment trusts (REITs) are companies that own real estate. You can buy shares in REITs similar to stock, and you mainly make money from REITs through dividends. REITs often own apartments, warehouses, self-storage facilities, malls and hotels. You can purchase REITs through an investment account, also called a brokerage account, similar to stocks.Congress created real estate investment trusts in 1960 as a way for individual investors to own equity stakes in large-scale real estate companies, just as they could own stakes in other businesses. This move made it easy for investors to buy and trade a diversified real-estate portfolio.When comparing potential returns it can be helpful to look at benchmarks. The S&P 500 is a collection of five hundred of the biggest U.S. companies. When you look at their collective performance, that's how the S&P 500 has performed. The FTSE NAREIT All Equity REITs Index, similarly, tracks the performance of equity REITs. And from 1972 to 2019, REITs, on average, returned an 11.8% total annual return compared to the S&P's 10.6%.That's not to say that REITs are better than stocks — it's simply one metric to look at. That being said, if you were to invest in REITs in addition to stocks, you would diversify your portfolio and likely be more protected against risk. One thing to note about 5-year returns at the moment is that many REITs plummeted in the early days of the pandemic in 2020. Taking a 5-year look from April then to April now shows what appear to be pretty outsized returns, which could normalize in the coming months.

Investing in REITs: How to get started

Investing in REITs is as simple as opening a brokerage account, or investment account, which usually takes just a few minutes. Then you’ll be able to buy and sell publicly traded REITs just like you would any other stock. Because REITs pay such large dividends, it can be smart to keep them inside a tax-advantaged investment account like a Roth IRA to get the best possible tax treatment.If you don’t want to trade individual REIT stocks, it can make a lot of sense to simply buy an ETF or mutual fund that vets and invests in a range of REITs for you. You get immediate diversification and lower risk. Many brokerages offer these funds, and investing in them requires less legwork than researching individual REITs for investment.