How I Made $5000 in the Stock Market

3 Real Estate Stocks to Shine in 2026

Dec 29, 2025 02:30:00 -0500 by Ian Salisbury | #Real Estate

Lower interest rates could be positive for real estate investment trusts. (Illustration by Glenn Harvey)

Key Points

As would-be home buyers know, real estate is all about interest rates. That could set the sector up for gains in 2026.

The Federal Reserve cut rates by a quarter of a percentage point three times in 2025, and markets are expecting at least two more reductions in the coming year. That could be positive for real estate investment trusts, or REITs. Rate cuts make mortgages more affordable and tend to boost employment, giving people the confidence to buy property.

REIT valuations looks attractive. The sector trades at 17 times estimated funds from operations, the industry’s equivalent to profits, compared with 24 times FFO four years ago. Stock prices are beaten down, boosting yields. Today, REITs yield 3.4% on average, higher than any other sector in the S&P 500 , and three times what the market as a whole pays.

Wall Street is also getting more upbeat. The REIT team at BTIG expects a recovery in property values, a rebound in transaction activity, and highly liquid debt markets to help the sector, according to a recent note. Not only are valuations low, they write, REITs are heading into 2026 with one of the best growth outlooks since 2018. Management teams are “getting more aggressive in addressing the perceived valuation gaps in their shares,” BTIG says.

Here are some REITs for investors to consider in three categories: growth, yield, and value.

Growth Pick

Welltower / WELL

Yield over past year: 1.6%

Price/FFO: 31

REITs aren’t necessarily growth stocks—but Welltower is capitalizing on one of America’s biggest demographic trends: aging baby boomers. About four million Americans retire every year, and the oldest boomers, born in 1946, will turn 80 in 2026. That has fueled growth for Welltower, which owns senior housing and other healthcare-related properties in the U.S., Canada, and the U.K.

Welltower is hardly an unfound gem—shares have returned just over 50% this year. But many analysts think it has room to climb, given an impending supply crunch of senior housing. Only 26,000 senior housing units are being developed each year, notes CFRA analyst Nathan Schmidt, who projects that will lead to a shortage of 400,000 to 500,000 units in 2030.

Senior housing currently makes up about two-thirds of the company’s portfolio, with the rest focused on outpatient and other types of healthcare. Welltower recently said its goal was to make senior housing 85% of the portfolio through moves like its $7 billion acquisition of Barchester Healthcare’s 111 U.K. retirement communities in October.

Welltower’s stock trades at 31 times forward funds from operations, roughly twice the sector’s average. But Welltower should be able to grow free cash flow at 15% a year for the next three years, says T. Rowe Price Estate Fund portfolio manager Gregg Korondi, whose fund owns the stock. That is more than three times what Wall Street expects for the rest of the industry, he notes.

A bonus, adds Korondi, is that Welltower’s growth looks “pretty durable”—healthcare tends to hold up well in recessions. “People still move in [to retirement homes] when they have to,” he says. “You have some multigenerational care, but it’s really tough on people, on working families.”

Yield Pick

Brixmor Property Group / BRX

Yield over past year: 4.8%

Price/FFO: 11

Although Americans love to shop online, they still regularly visit stores, especially when it comes to groceries. The average U.S. household makes six grocery shopping trips a month, according to CFRA.

That should bode well for Brixmor , which operates more than 350 open-air shopping centers, concentrated in Florida, Texas, Pennsylvania, and New York. About four-fifths of its rents are from tenants in centers anchored by grocery stores.

Despite tepid consumer sentiment, Brixmor is still finding new tenants. The company leased 1.5 million square feet in the third quarter, with tenants like Marshalls and Total Wine & More helping fill space, noted Goldman Sachs analyst Caitlin Burrows in a recent note.

She forecasts 5% to 6% growth in funds from operations in 2026 and 2027, in line with Wall Street’s expectations. Considering the shares are trading at just 11 times forward FFO, a 35% discount to the sector, she thinks the stock looks attractive. Goldman added Brixmor to its Conviction List of top stock picks in November with a price target of $32, up from recent prices around $26.

Brixmor cut its dividend during the Covid-19 pandemic, but its 4.8% dividend yield looks safe today, according to Floris van Dijkum, a real estate analyst at Ladenburg Thalmann, who rates the stock a Buy. At just below 80%, its dividend payout ratio is on the lower end for REITs with room to grow, he says.

Van Dijkum also thinks the market has failed to appreciate the ways Brixmor and other shopping-center owners are squeezing more money out of properties. Examples include turning rarely used parking-lot space into Starbucks drive-throughs and shrinking the footprints of anchor stores in favor of space for additional smaller shops, where rents grow faster.

One point to watch is that Brixmor CEO James Taylor is retiring Jan. 1. But he is being succeeded by Brian Finnegan, a 20-year Brixmor veteran, and van Dijkum foresees a smooth transition.

Value Pick

BXP / BXP

Yield over past year: 4.9%

Price/FFO: 10

Office REITs have faced a double whammy in the past few years. Higher interest rates have boosted their costs and the work-from-home trend, which cleared out many downtown office districts, has hit demand for the space they need to fill.

Now, as rates come down, major office markets are finally turning the corner. The nationwide office vacancy rate declined in the third quarter for the first time in five years, according to brokerage CBRE.

The shift should benefit BXP , the largest office REIT by market value. While it has a portfolio of 187 properties in a handful of important big-city office markets, more than three-fourths of its income comes from three major markets: Boston, New York, and San Francisco. All have been showing strength recently.

“Large cities were going through a soft patch but aren’t dead,” says Julien Albertini, co-manager of the First Eagle Global Income Builder fund, which holds the stock. “The top quality, the trophy assets, those still have value, and they are what BXP owns,” he adds, citing San Francisco’s Salesforce Tower and Boston’s Prudential Center as examples.

Despite the improved outlook, BXP’s share price doesn’t reflect much optimism. Shares are essentially flat in 2025 and trade at just 10 times forward funds from operations. One likely reason investors are so sour: In September, BXP slashed its dividend by nearly 30%.

While no one likes to see a payout shrink, the move could prove wise in the long run. The stock still yields a healthy 4% based on estimated coming payments, and the new dividend looks stable, costing only about 60% of next year’s expected FFO.

Paying out less in dividends means BXP will be able to invest an extra $55 million in cash each quarter. A large chunk of that will likely be routed to 343 Madison Ave., a $2 billion office tower the company is building next to New York’s Grand Central Station, a few blocks from JPMorgan Chase’s celebrated new headquarters building.

It is a big bet, but one with lots of upside. “It’s a lot of exposure, but it’s the right exposure,” says J.P. Morgan analyst Anthony Paolone, who upgraded the stock to Overweight in October with a $83 price target. “They’re going to build a very good building in arguably the strongest office market in the country.”

Write to Ian Salisbury at ian.salisbury@barrons.com