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
- 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:
- American Tower (Telecommunications)
- Simon Property Group (Retails / Malls)
- Welltower (Healthcare / Senior Housing)
- Realty Income Corp (Retail / Food / Fitness)
- Equity Residential (Residental Housing)
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.
We create tools for like-minded investors which help you make better decisions.