R
eal estate has long been a popular long-term investment, offering an inflation hedge, steady income stream, and growth opportunities. Real estate stocks allow investors to tap into this market through publicly listed companies, primarily via REITs (Real Estate Investment Trusts). REITs provide a diversified portfolio by investing in various real estate assets, while individual stocks focus on management and development services.

    Investing in real estate stocks offers outstanding portfolio diversification due to the sector's limited correlation with the stock market. This diversification can lead to increased wealth as rising home values may encourage more stock investments. REITs also offer a significant dividend yield of at least 90% of their earnings to shareholders.

    Real estate investors should consider diversifying their portfolios by mixing REITs with different portfolio preferences, avoiding highly indebted companies and focusing on data center, healthcare, and warehouse stocks. A long-term approach is essential for handling volatility in the real estate sector.

    Some attractive real estate stocks include NNN REIT (NNN), Prologis (PLD), Park Hotels & Resorts (PK), Kilroy Realty (KRC), Federal Realty (FRT), Welltower (WELL), Host Hotels & Resorts (HST), Invitation Homes (INVH), Equinix (EQIX), Empire State Realty (ESRT), and Realty Income (O).

    Prologis, the world's largest industrial real estate company, has a strong track record of acquiring warehouses near urban areas, maintaining high standards to secure prime rent prices. Its recent focus on e-commerce and data centers, combined with double-digit profit and dividend growth over five years, makes it an attractive investment.

    Public Storage, the world's largest owner-operator of self-storage facilities, offers a responsible dividend strategy and excellent expansion prospects. Its abandoned takeover bid for Abacus Storage and strong management expertise in acquisition and development make it a promising long-term investment.

    Investors should consider taking a long position in Prologis between $112.19 and $114.50 and Public Storage between $289.15 and $296.47, given their potential for growth and dividend increases.