The Magnificent Seven stocks are fun to watch, but to be fair, they do look rather expensive right now. The median P/E ratio of this exclusive club is 38 times trailing-12-month earnings, and some are valued much higher.
With that in mind, remember that all the Magnificent Seven stocks are in the tech sector. But there are some other areas of the market where there are some excellent bargains, even among the largest and strongest companies. And one of these is real estate.
My "Magnificent Seven" of the real estate sector
There are well over 100 major real estate investment trusts, or REITs, in the market, but when constructing my Magnificent Seven, I'm looking at some of the largest players in the industry that all have excellent track records of growth, with large opportunities still ahead of them.
With that in mind, here are my Magnificent Seven REITs, listed in no particular order, followed by quick descriptions of each one:
Company (Ticker Symbol) | Specialization | Dividend Yield |
|---|---|---|
Prologis (NYSE: PLD) | Industrial | 2.9% |
Digital Realty Trust(NYSE: DLR) | Data centers | 3.2% |
American Tower(NYSE: AMT) | Communications infrastructure | 3.3% |
Realty Income(NYSE: O) | Net-lease retail | 5.9% |
Vici Properties(NYSE: VICI) | Gaming | 5.6% |
Mid-America Apartments(NYSE: MAA) | Residential | 4.6% |
Public Storage(NYSE: PSA) | Self-storage | 4.2% |
Data source: CNBC. Dividend yields as of March 4.
- Prologis: The largest REIT in the market, Prologis is a leader in industrial real estate, with a massive portfolio of warehouse and distribution center properties located all around the world.
- Digital Realty Trust: Digital Realty owns and operates data centers, which can be thought of as the physical "homes" of the internet. Data centers are secure and reliable places where servers and other computing infrastructure are housed.
- American Tower: Despite the name, American Tower is a worldwide leader in communications infrastructure, owning tens of thousands of cell towers that make your wireless communications possible.
- Realty Income: Realty Income owns more than 11,000 properties, about 80% of which are occupied by retail tenants. Its properties are mainly freestanding, and its tenants are in businesses that aren't easily disrupted by e-commerce and aren't too recession prone.
- Vici Properties: Vici owns a large portfolio of gaming real estate, including several iconic Las Vegas Strip properties. It has begun diversifying into other types of experiential real estate in recent years and hopes to become a massive experiential REIT.
- Mid-America Apartments: One of the leading residential REITs, Mid-America owns more than 100,000 apartment units, most of which are located in markets with above-average job and wage growth.
- Public Storage: The largest self-storage operator by market cap, Public Storage has a long track record of responsible growth and delivering excellent returns for investors.
Why invest in these REITs now?
To be clear, these are seven rock-solid REITs, and they could be excellent additions to your portfolio no matter when you buy them. However, these could be especially great opportunities as we head into spring.
For one thing, all seven have excellent growth potential, but the current high-interest environment isn't a great one for growth. Cost of capital is high right now, and it's difficult to borrow at today's interest rates and still grow earnings.
In addition, many of these REITs are significantly below their all-time highs, but not for any reason to do with the businesses themselves. In addition to making borrowing costs high, rising rates tend to put negative pressure on income-based investments like REITs. While the S&P 500 is at a record high as I write this, five of the seven REITs mentioned here are at least 20% below their peaks. However, if rates start to come down later this year like many experts expect, it could be a major positive catalyst for their total returns in the coming years.
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Matt Frankel has positions in Digital Realty Trust, Public Storage, Realty Income, and Vici Properties. The Motley Fool has positions in and recommends American Tower, Digital Realty Trust, Mid-America Apartment Communities, Prologis, Realty Income, and Vici Properties. The Motley Fool recommends the following options: long January 2026 $180 calls on American Tower and short January 2026 $185 calls on American Tower. The Motley Fool has a disclosure policy.
