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.
Dividend investing doesn’t have to be hard work. We create tools for like-minded investors which help you make better decisions.