A real estate investment trust (REIT) is a company that owns, and in many cases operates, income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels, and timberlands. Some REITs also engage in financing real estate.
REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership without actually having to go out and buy commercial real estate. REITs are required by law to distribute at least 90% of their taxable income to shareholders annually in the form of dividends. As a result, most REITs offer higher dividend yields than other stocks.
Investing in REITs can provide diversification benefits to a portfolio. Additionally, REITs can offer exposure to different asset classes and geographies. However, investing in REITs also carries risks, such as interest rate, liquidity, and market risks.
Overall, REITs can be a beneficial addition to a well-diversified portfolio for investors seeking income and exposure to real estate assets.
REITs are companies that own and operate income-producing real estate. Investors can buy shares in a REIT and earn a share of the income produced through the real estate without actually having to purchase the property. By law, REITs must distribute at least 90% of their taxable income to shareholders annually in the form of dividends. REITs can provide diversification benefits and exposure to different asset classes and geographies, but also carry risks such as interest rate, liquidity, and market risks.
When evaluating REITs as an investment opportunity, it is important to consider a variety of factors, including: