T
he real estate sector is poised for recovery as interest rates decline, shifting from a headwind to a tailwind for the REIT (Real Estate Investment Trust) sector. This change in direction makes buying REITs an attractive option now. Three top REITs to consider are Realty Income, W.P. Carey, and Extra Space Storage.

    Realty Income is a consistent grower with 30 years of consecutive dividend increases. Its monthly dividend yield is nearly 5%, significantly higher than the S&P 500's dividend yield. The company expects its adjusted funds from operations (FFO) to grow at a 4-5% annual rate, driven by rising rental income and acquisitions, supporting a similar growth rate in its dividend.

    W.P. Carey has delivered a quarter-century of annual dividend growth until last year, when it accelerated its exit from the office sector and reset its dividend. Despite this strategic move, W.P. Carey still offers an enticing dividend yielding nearly 6%. The REIT is rebuilding its portfolio by focusing on properties with better long-term growth fundamentals, such as industrial real estate.

    Extra Space Storage is a leading self-storage REIT that has grown steadily over the years through consolidation and steady demand growth. Its industry-leading third-party management platform drives outsized performance, generating management and insurance income while providing low-risk acquisition opportunities. The company pays a high-yielding (nearly 4%) and growing dividend, which should continue to rise as demand for self-storage space grows.

    These top-quality REITs have lost value since the Fed started raising rates a few years ago, but with that headwind shifting to a tailwind, their stock prices should begin recovering. Adding their growing dividends makes them smart buys right now.