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Dividend Investing: REITs

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 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:

We would not recommend creating a solely REIT portfolio or use these funds as only means of investing, but REITs can be used as a great tool for diversification and 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.

REITs in our dividend calculator