Top 4 REITs ETFs Recommended | How to Invest in Real Estate ETFs
Our top picks for real estate investment trust (REIT) ETFs. Compare dividend yields and key features of leading U.S. REIT ETFs including VNQ, SCHH, and XLRE.
REITs (Real Estate Investment Trusts) allow you to invest indirectly in real estate while earning attractive dividend income. Compared to direct property ownership, REIT ETFs offer the benefits of diversification with a small initial investment and high liquidity. This guide compares the leading REIT ETFs available to investors.
Top 4 REITs ETFs Recommended Rankings
The largest U.S. REIT ETF, providing diversified exposure to over 150 real estate investment trusts. Covers a broad range of property sectors including data centers, cell towers, and logistics facilities.
Similar holdings to VNQ but with a lower expense ratio of just 0.07%. An excellent choice for investors who want broad U.S. REIT exposure while keeping costs to a minimum.
Invests exclusively in large-cap REITs included in the S&P 500 Index. While it holds fewer positions, it concentrates on high-quality, blue-chip REITs with a very low expense ratio of 0.09%.
Invests in real estate markets worldwide, excluding the United States. Pairing VNQI with VNQ creates a comprehensive globally diversified real estate portfolio.
Table of Contents
1. What Are REITs?
REITs (Real Estate Investment Trusts) are companies that own and operate income-producing real estate, distributing rental income to investors as dividends. Because they are legally required to pay out at least 90% of taxable income as dividends, REITs typically offer higher dividend yields than ordinary stocks.
2. What Do REIT ETFs Hold?
REIT ETFs such as VNQ and SCHH provide diversified exposure across property types including offices, logistics centers, data centers, residential properties, and shopping malls. In recent years, the weighting toward data center and cell tower REITs has been growing within these funds.
Key Investment Tips
- 1.REIT ETFs are sensitive to interest rates — they tend to perform relatively well during periods of falling rates.
- 2.Allocating 5–15% of your portfolio to REITs can enhance diversification and reduce overall volatility.
- 3.Dividends from REITs may be taxed differently from ordinary dividends, so be sure to review the tax treatment.
- 4.Combining VNQ (U.S.) with VNQI (global ex-U.S.) gives you diversified exposure to real estate markets worldwide.
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