The best real estate ETFs | justETF (2024)

FAQs

Is real estate ETF a good investment? ›

Real estate investment trust, or REIT, ETFs are a great choice for investors looking for high dividend income and good growth potential.

The largest Real Estate ETF is the Vanguard Real Estate ETF VNQ with $34.66B in assets. In the last trailing year, the best-performing Real Estate ETF was HAUS at 17.63%. The most recent ETF launched in the Real Estate space was the iREIT - MarketVector Quality REIT Index ETF IRET on 03/06/24.

VNQ ETF FAQ

Currently there's no upside potential for VNQ, based on the analysts' average price target. Is VNQ a Buy, Sell or Hold? VNQ has a consensus rating of Moderate Buy which is based on 96 buy ratings, 50 hold ratings and 8 sell ratings.

Investors should closely read prospectus materials when researching REIT ETFs. Many different indexes exist with varying areas of focus such as commercial mortgages and high-risk mortgages. Investors may unknowingly have exposure to these more "risker" areas of the real estate market.

Both ETFs have the same top 3 sector exposures: Real Estate and Industrials. XLRE is less expensive with a Total Expense Ratio (TER) of 0.1%, versus 0.12% for VNQ. XLRE is up 2.88% year-to-date (YTD) with +$612M in YTD flows. VNQ performs worse with 2.83% YTD performance, and +$298M in YTD flows.

The Vanguard REIT Index Fund pays quarterly distributions consisting of dividend income, return of capital, and capital gains.

The primary difference between VTI and VOO is that the VTI portfolio replicates the performance of the entire U.S. stock market, including small-caps and mid-caps, while VOO primarily holds large-caps.

To compare these two companies we present long-term analysis, their fundamental ratings and make comparative short-term technical analysis which are presented below. The conclusion is O is a Buy and VNQ is a Buy.

By law, REITs must distribute at least 90% of their taxable income to shareholders. This means most dividends investors receive are taxed as ordinary income at their marginal tax rates rather than lower qualified dividend rates. Any profit is subject to capital gains tax when investors sell REIT shares.

What is the best REIT to invest in 2024? ›

Reasons to hold REITs in a Roth IRA

In any tax-advantaged retirement account, investments are allowed to grow on a tax-deferred basis, meaning that you won't pay capital gains tax if you sold any investments at a profit, and you won't have to include dividends with your taxable income.

They can provide added diversification, potentially higher total returns, and/or lower overall risk. In short, their ability to generate dividend income along with capital appreciation makes them an excellent counterbalance to stocks, bonds, and cash.

Some of the main risk factors associated with REITs include leverage risk, liquidity risk, and market risk.

Over a 15-year period, according to Cohen & Steers, actively managed REIT investors realized an annualized 10.6% return. Of the other active strategies, opportunistic real estate funds placed second, at 9.8%. Core and value-added funds had average annualized returns of 6.5% and 5.6%, respectively, over 15 years.

Tax implications of dividends: REIT ETFs are required to distribute at least 90% of their taxable income as dividends to investors. These dividends are taxed at the investor's ordinary income tax rate, which can be as high as 37%. However, qualified dividends, which meet certain requirements, are taxed at a lower rate.