Want to jump straight to the best? Most of our users prefer Interactive Brokers for stock trading.
Buying shares in real estate companies can give you the same benefits as investing in real property. You could be earning passive income from rental revenue and capital gains without hammering a nail.
Real estate stocks give you exposure to companies that develop and manage commercial, residential and industrial properties. These companies share a piece of the action with you through publicly-traded real estate investment trusts (REITs).
Like any other stock, you trade REITs in the open market. These real estate stocks provide a low-cost way of sharing in real estate revenue and gains. There are other stocks that provide exposure to the real estate market. Nevertheless, the publicly-traded REITs category dominates real estate stocks.
The following list of top real estate stocks reflects this.
Overview: Real Estate Stocks
As a means of including the average investor into the lucrative real estate market, the U.S. Congress passed the Real Estate Investment Act in 1960. The bill’s sponsors wanted to duplicate the success of the mutual fund industry as a way of attracting capital to the real estate industry. So, they used the mutual fund equity structure to design a mutual fund for real estate. This became a means for people without much investment capital to benefit from the real estate market.
Although REITs had been around for over 30 years, these funds did not become popular until the credit crunch hit in 1992 or so. The hotel industry, in particular, turned to REITs as a source of financing when the banks turned them away. Residential and industrial divisions soon followed the commercial real estate industry. By the end of 2001, REITs had become the No.1 institutional source of real estate capital with equity of $146 billion — or 39% of capital sources.
By law, REITs must distribute 90% of net income to the shareholders in the form of dividends. The dividend revenue comes from rental income and capital gains. Publicly traded REITs typically have higher dividend yields than other equity investments. Since you can easily trade REITs, you can tap in into this reliable real estate income source without losing your investment’s liquidity.
Best Online Brokers for Real Estate Stock
Online brokers can simplify the process of trading real estate stocks. You’ll be able to thoroughly research your investment options, make smooth trade and keep track of your portfolio in one central space.
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
- Active traders
- Intermediate traders
- Advanced traders
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Intuitive trading platform with technical and fundamental analysis tools
- Does not support trading in mutual funds, bonds or OTC stocks
Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.
Get started right away by downloading Moomoo to your phone, tablet or another mobile device.
- Cost-conscious traders
- Active and Advanced traders
- Over 8,000 different stocks that can be sold short
- Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
- No minimum deposit to open an account.
- No chat support
It seems like new digital investment management platforms are sprouting up left and right, and for good reason — there’s a great need for easy, straightforward investment management that doesn’t cost an arm and a leg in fees or to get started. If you’re new to investing or an old hat who wants to make the switch to a virtual manager, deciding which features you need can be confusing if not overwhelming.
If you want a no-frills financial management platform, Axos Invest (formerly WiseBanyan) takes a traditional but sophisticated approach to automated online investing.
- Traditional investors trying out an automated investor for the first time
- New investors that want to take a hands-off approach to portfolio management
- Straightforward automated investing
- Relatively low account minimum and automated investing fee
- A solid roster of available investment account types
- Not a stand-out from other services if you’re someone who likes all the bells and whistles with your digital financial platform
- No direct relationship with a human financial advisor
This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.
Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.
Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.
- Price earnings growth valuations
- Easily evaluate investment opportunities
eToro is a broker that offers access to over 25 of the world’s most popular cryptocurrencies, forex and over 1600 stocks. They have a few unique education and useability tools. Traders can begin buying and selling in as little as 10 minutes.
eToro’s unique CopyTrader feature allows new investors to “copy” the buy and sell orders of professional investors, while the company’s eToro Club feature provides investors with a range of additional education tools and resources.
- Traders looking for an easy-to-use platform
- Traders who want to practice their trades using a virtual account before entering the market
- Simple platform that is easy to master
- CopyTrader feature that allows new traders to copy the same strategies used by professionals
- Virtual dummy account that gives you $100,000 to practice trades
- High non-trading fees
Features to Look for in Real Estate Stock
- Earnings growth: The key earnings indicator of real estate stocks is the funds from operations (FFOs). You calculate the FFO by subtracting the gains from the sales of property from the net income and adding depreciation and amortization. The FFO per share is your dividend yield. Ideally, a company should show a gradual increase in this metric. You can find a real estate company’s FFO history in the quarterly income report on the company’s website. The 4th quarter report also has year-end totals.
- Management team: A good management team is imperative to the consistent operation of a real estate company. Poor management can result in cost overruns and sluggish rental income. In the company’s income report, you can use the cash flow summary to get some insight into the management’s operating, investing and financing activities. While you are on the company’s website, take a look at the executive profiles.
- Diversification: Before you decide to buy a real estate company’s stock, take a look at its basket of properties. Are the properties in the same area? Does the company provide only one or two services? Be careful. Real Estate companies with a narrow reach may lack diversification, leaving them subject to the same risk factors such as hurricanes, service specific restrictions or local strife.
Significance of Investing in Real Estate Stocks
Real estate stocks in the form of REITs present an investment opportunity for you to earn better-than-average income without assuming much risk or losing liquidity from your investment capital. The 5 real estate stocks we have highlighted are an elite group in this sector.