REITs (Real Estate Investment Trusts) have become an attractive way for those who want to enter the real estate market without owning property directly to do so. REITs offer attractive returns with relatively low interest rates allowing investors to reap high dividend payouts.
Why invest in them? Diversification and dividends. Real estate has long been considered an attractive diversification tool among those seeking to bolster their investment portfolios through company stock investments. REITs also boast very strong dividend yields – making them popular choices amongst dividend hunters.
REITs may make sense for certain individuals and can mitigate some risks associated with investing in them; but first let me go into more depth on exactly what REITs are…
What Is a Real Estate Investment Trust (REIT)? mes mes Its mes mes REITs typically invest most or their capital into real estate properties or mortgages that generate rental income through rental payments on properties they own or payments on loans they own which generate revenue via rental income or mortgage payments on properties.
REITs stand out in terms of government requirements; for instance, they must distribute at least 90% of earnings as dividends to investors (many distribute 100%). In exchange, REITs don’t owe corporate income taxes on earnings generated.
REITs typically pay out dividends four times each year (once every quarter). Dividend yield is calculated as annual dividends divided by price per share – so, for instance, an investment with an yield of 10% and share price of $100 would have yielded you $10 in total over time.
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