economy
February 23, 2026
Dividend-Paying Real Estate Stocks Are Outperforming as AI Fears Roil Markets. Where to Find Opportunities
BMO is predicting REITs will move even higher.
TL;DR
- The S&P 500 real estate sector has seen a year-to-date gain of over 8%, outperforming the broader S&P 500 index.
- Concerns over AI disruption have impacted software stocks and previously hit REITs, but the office sector is a small part of the overall REIT market.
- Declining interest rates are expected to benefit REITs by improving earnings growth, capitalization rates, and dividend yield attractiveness.
- BMO predicts a "REIT Redemption Tour" for 2026, with total returns of 17%, highlighting data centers and senior housing as strong investment areas.
- Data centers are expected to see significant growth due to AI infrastructure spending, with Equinix and Digital Realty Trust noted as key players.
- Senior housing REITs like Welltower are attractive due to an aging population, limited supply, and their leadership in deploying AI within their businesses.
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