Dividend Investing: REITs

Published on
21st May 2020
Stock mentioned in this article
Div. yield
Annual dividend
Consumer Services
Consumer Services
Consumer Services
Consumer Services
Consumer Services

Diversification is probably one of the most important things for investors of any kind. Many people choose to diversify their portfolio with real estate but that comes with a lot of specific issues. An interesting alternative is Real Estate Investment Trusts (REIT), which can help alleviate the disadvantages of investing in physical real estate and provide a high yield (often payable monthly). 

Keys points about REITs

  • They offer a higher yield than most of the dividend stocks
  • Their prices fluctuate differently than stocks
  • They have to pay 90 % of their income via dividends 
  • Their income comes mostly from passive rent leases

REITs Pitfalls

  • There is usually not very great price growth
  •  As Interest rates rise some REITs can lose value (it also works oppositely)
  • Everything that affects rents is a risk factor: Trends, moving into big cities, a slower economy

What to focus on when comes to REITs

  • Management of the company
  • Portfolio of real estate assets
  • Dividend history
  • Debt level 
  • Volatility (lower the better)

We would not recommend creating a solely REIT portfolio or use these funds as the only means of investing, but REITs can be used as a great tool for diversification and an easy start to real estate investing for people who don’t want to or cannot buy physical real-estate. 

You can also add (multiple) REITs to our dividend calculator! You weighted average dividend yield and estimated returns. We created a list of all public tradeable REITs where you can explore more than 200 Real Estate Investment Trusts listed on NYSE and NASDAQ.

Some of the bigger and popular REITs are:

American Tower Corporation (REIT)
2.08% dividend yield
$250.53 per share

American Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of approximately 181,000 communications sites.

Simon Property Group Inc
3.99% dividend yield
$146.78 per share

Simon is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG).

Welltower Inc
2.85% dividend yield
$85.53 per share

Welltower Inc. is an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate infrastructure needed to scale innovative care delivery models and improve people's wellness and overall health care experience. Welltower?, a real estate investment trust (REIT), owns interests in properties concentrated in major, high-growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities and outpatient medical properties.

Equity Residential
2.75% dividend yield
$87.62 per share

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract high quality long-term renters.

Realty Income Corporation
4.13% dividend yield
$68.92 per share
Ticker O:NYSE

Realty Income, The Monthly Dividend Company, is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with our commercial clients.