Vanguard Real Estate ETF

VNQ

Market cap $35.5B

REITs have been rising since late 2023. I expect their rally to continue. I explain why and highlight a Top Pick for 2026.

The Income Quintet - BDCs, Midstream Energy, REITs, Preferred Stocks, and Covered Call ETFs - offers a balanced approach to maximizing yield and income safety. I prioritize quality over raw yield, focusing on internally managed BDCs, disciplined midstream operators, select REITs, and actively managed preferred ETFs for sustainable income. BDCs with internal management, like MAIN, command significant NAV premiums, reflecting superior alignment and lower capital costs compared to externally managed peers.

The REIT sector closed out 2025 with a tough December (-1.48%) and finishing the year with a -3.57% total return for 2025. Small caps (+0.51%) eked out a small gain in December, while mid caps (-1.77%), large caps (-2.55%) and micro caps (-3.88%) fell at the close of the year. 42.04% of REIT securities had a positive total return in December with only 38.36% in the black for the full year.

Now is the time to make our picks for the next year. Some REITs enjoy strong near-term catalysts for upside. I highlight 3 such REITs that could surge in 2026.

As time goes on, I've started to focus more on building ETF positions and less on individual stocks. I'm planning to buy shares of two ETFs to capitalize on mispriced small-cap stocks and interest rate tailwinds.

A massive policy shift just sent an unexpected signal to income investors. Some of the biggest winners from Trump's defense budget proposal may not be who everyone thinks they are. My portfolio was built for this, and the market hasn't noticed yet.

Not all REITs are worth buying. In fact, some of them are facing severe difficulties. I highlight which REITs to avoid going into 2026.

If you're hunting for yield in 2026, emerging market bonds just became more interesting.

Everything says REITs should be soaring — but they aren't. A hidden headwind is quietly holding returns back. One overlooked niche is where I am pouring my REIT capital.

VNQ holds over five times more assets under management than XLRE and owns a much broader mix of real estate stocks Both ETFs delivered identical 1-year returns and saw similar growth of $1,000 over five years VNQ yields 0.5 percentage points more than XLRE and has an expense ratio of 0.13%, compared to XLRE's 0.08%. These 10 Stocks Could Mint the Next Wave of Millionaires ›