1 Wall Street Analyst Says There's a Great Investment Hiding in Plain Sight. These 2 Dividend Stocks Are My Best Ideas for Investing in It.

Reuben Gregg Brewer, The Motley Fool

Tue, Apr 15, 2025, 7:00 AM 4 min read

The market is in a state of flux thanks to geopolitical issues around tariffs. There is a huge amount of uncertainty. If you have money to invest today, it is hard to decide what to do, since sticking cash under your mattress may feel like a good call in the midst of a dramatic market decline.

One Wall Street pro has a different tactic. Buy shares in businesses that provide a life necessity: shelter. Here are two high-yield ways to do just that.

Maura Pape, a senior investment strategist at Bernstein Private Wealth Management, recently highlighted commercial real estate as a good investment opportunity to Bloomberg. Commercial real estate is actually a pretty big category, and small investors would have a hard time investing directly in the space, anyway. But Pape did, in fact, narrow things down, singling out multifamily as a particular opportunity.

"Multifamily" sounds fancy, but it just means apartment buildings. The truth is, you could probably find a small apartment building in your own neighborhood to buy. But that might pose financial and practical challenges and wouldn't afford you diversification or scale. This is why you might be better off with an apartment-focused real estate investment trust (REIT).

There are two big stories here. First, shelter is a life necessity. It doesn't matter if the market is falling or if the economy has fallen into a recession. People still need a place to live, and that makes apartment REITs a fairly resilient property type.

Second, there has been a drop in multifamily construction projects in recent years that should help support rental rates, and thus growth, for apartment landlords.

Two well-run apartment REITs you might want to look at are AvalonBay Communities (NYSE: AVB) and UDR (NYSE: UDR). Here's why.

AvalonBay isn't the largest apartment landlord, but it is one of the best run. It has a material focus on coastal markets, where supply has been historically constrained. It also has a long history of active portfolio management as well, buying, selling, and building assets, depending on which one leads to the best returns.

AvalonBay's portfolio activity is centered around ensuring that it has young and attractive apartments to offer consumers who live in regions where rents are high and/or growing rapidly. It is currently working to expand its presence in the Sunbelt region, where population growth has been strong in recent years.

UDR is another large apartment landlord. It has long focused on having a diversified portfolio. It currently has exposure to both coastal markets and the Sunbelt, where it has operated for many years.