Personal Finance

Retirees: The 10 Real Estate ETFs to Own for Growth and Diversification

Ian Cooper

Published: January 5, 2025 8:36 am

If you want to keep your investment portfolio safe while generating income, consider real estate investment trusts (REITs). Most also offer diversification and act as a hedge against inflation and market volatility.

Key Points About This Article

• If you want to keep your investment portfolio safe and generate income, you should strongly consider real estate investment trusts (REITs).
• They offer diversification and as a hedge against inflation and market volatility.
• Also: Take this quiz to see if you’re on track to retire^(Sponsored)

With inflation, real estate serves as a hedge.

That’s because rental rates will rise with inflation, which will positively impact your investment.

As far as income, REITs are required to pay 90% of their income as dividends. A REIT also allows you to diversify with commercial real estate holdings. That can include offices, apartment buildings, warehouses, hospitals, shopping centers and hotels, or a combination of all.

Plus, most pay out high yields, sometimes monthly.

Helping, Nareit’s 2025 REIT Outlook notes, “In a world that will be marked by increasing and accelerating change, we see opportunities for REITs in 2025. Specifically, we expect REITs to: find accretive growth opportunities as CRE transactions increase; continue leading globally as they embody the megatrends that will define real estate for the next decade: specialization, scale, innovation, and sustainability; and make critical inroads with institutional investors seeking efficient access to CRE with those characteristics.”

Big Growth Ahead for Commerical and Residential Real Estate

We also have to consider there’s a big opportunity ahead for commercial and residential real estate. All of which will create a bigger opportunity for related ETFs.

With office space, “net office space absorption in the fourth quarter of 2024 is expected to be 9.4 million square feet, with another 10.8 million square feet of positive absorption for the full year in 2025 and 3.9 million square feet of positive absorption in the first three quarters of 2026,” as noted by the Commercial Real Estate Development Association.

Medical office space is still seeing significant demand with an aging population.  In fact, according to Cushman & Wakefield, demand for medical office space should rise in 2025 after annual sales transactions pick up momentum in 2024.

With apartments, rental rates are expected to push higher with higher demand.

Also, with shopping centers, demand is growing with mall visits and shoppers are expected to pick up momentum. All are more strong reasons to buy real estate ETFs.

Look at the Invesco KBW Premium Yield Equity REIT ETF 

With a yield of about 8.8%, the Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY) invests at least 90% of its total assets in the securities of small and mid-cap equity REITs that trade in the U.S. and carry respectable yields. Some of its top holdings include Global Net Lease, Service Properties Trust, Global Medical REIT, Gladstone Commercial, EPR Properties and Omega Healthcare to name a few.

It also has an expense ratio of 0.35% and just paid a monthly dividend of $0.12625 on December 27. The next one is expected in late January. Technically, KBWY is oversold at $17.67. From here, we’d like to see it retest $19 initially.

JPMorgan Equity Premium Income Fund

With a yield of 8%, the JPMorgan Equity Premium Income Fund (NYSEARCA:JEPI) generates income through stock dividends and options premiums. Some of its top holdings include Trane Technologies, Meta Platforms, Southern Co., AbbVie, Mastercard, Amazon.com, Microsoft and ServiceNow to name just a few.

The JEPI ETF also has an expense ratio of 0.35% and just paid out a monthly dividend of $0.40177 on December 4 to shareholders of record as of December 2. JEPI is also technically oversold, last trading at $58.07.

VanEck Mortgage REIT Income ETF

With an expense ratio of 0.43%, the VanEck Mortgage REIT Income ETF (NYSEARCA:MORT), which replicates the price and yield performance of the MVIS US Mortgage REITs Index, which tracks the performance of U.S. mortgage REITs. It also has a yield of 13.67%. It also just paid out a dividend of 36 cents on December 30.

Some of its top holdings include Annaly Capital, AGNC Investment, Starwood Property, Arbor Realty, Ladder Capital and Ellington Financial. Much like the others, MORT is also technically oversold, last trading at $10.45.

iShares Mortgage Real Estate ETF 

With an expense ratio of 0.48%, the iShares Mortgage Real Estate ETF (NYSE:REM) offers exposure to commercial and residential mortgage real estate. It also yields 9.14% and just paid out a dividend of $0.87141438 per share on December 20.

Some of its top holdings include Annaly Capital, AGNC Investment, Starwood Property, Rithm Capital, Arbor Realty, Two Harbors Investment and Chimera Investment to name a few. REM is also technically oversold, last trading at $21.05.

The Hoya Capital Housing ETF

There’s also The Hoya Capital ETF (AMEX:HOMZ), which offers exposure to the U.S. residential housing industry, including rental operators, homebuilders, home improvement companies and real estate services companies. With an expense ratio of 0.3%, the ETF yields 1.76%.

Some of its top holdings include Lowe’s, Home Depot, UMH Properties, Sun Communities, AvalonBay Communities and Equity Residential to name just a few. It also just paid its monthly dividend of $0.075 on December 18. HOMZ is also technically oversold, last trading at $45.03.

Vanguard Real Estate ETF

With an expense ratio of 0.13% and a dividend yield of 3.87%, the Vanguard Real Estate ETF (NYSEARCA:VNQ) is attractive and oversold.  It actively invests in stocks issued by real estate investment trusts (REITs), companies that purchase office buildings, hotels, and other real property.

Some of its top holdings include Prologis, American Tower, Equinix, Digital Realty Trust, Simon Property Group and Realty Income Corp. to name a few.

Residential REIT ETF

Next up is the Residential REIT ETF (AMEX: HAUS) — an active pure play on U.S. residential real estate.

With an expense ratio of 0.6% and a yield of 2.76%, the ETF recently paid a dividend of 13 cents a share on October 31. The next payment should be out by January 2025.  Some of its top holdings include AvalonBay Communities, BRT Apartments, Welltower, Essex Property Trust, Equity Residential and UMH Properties.

HAUS is also technically oversold and should pivot higher, especially with residential real estate starting to regain momentum.

iShares Residential and Multisector Real Estate

We can also look at the iShares Residential and Multisector Real Estate ETF (NYSEARCA:REZ).

With an expense ratio of 0.48%, the ETF tracks U.S. residential, healthcare and self-storage real estate equities. It also yields 2.3%, with a recent payout of $0.640580 to shareholders on December 20. These are paid quarterly.

Key holdings include Welltower, Public Storage REIT, AvalonBay Communities, Extra Space Storage REIT, Equity Residential and Mid-America Apartment Communities. REZ is also technically oversold, last trading at $80.11. From here, we’d like to see the ETF initially retest $90 a share near term.

iShares Core U.S. REIT ETF

There’s also the iShares Core U.S. REIT ETF (NYSEARCA:USRT).

With an expense ratio of 0.08%, the ETF offers exposure to U.S. real estate equities. That includes names such as Prologis REIT, Equinix, Welltower, Digital Realty Trust, Public Storage REIT, and Iron Mountain to name a few of the top ones. The REIT also just paid a dividend on $0.507862 to shareholders on December 20. Dividends are paid monthly with this REIT.

Just like the other ETFs on this list, the USRT ETF is oversold. Last trading at $56.67, we’d like to see it initially retest $62 a share near term.

Invesco S&P 500 Equal Weight Real Estate ETF

Last on the list of real estate ETFs to buy and hold is the Invesco S&P 500 Equal Weight Real Estate ETF (NYSEARCA:RSPR). With an expense ratio of 0.4%, and a yield of 2.58%, the ETF equally weights stocks in the real estate sector of the S&P 500. Top holdings include Regency Centers, Federal Realty Investment Trust, Equity Residential, and Simon Property Group.