REIT
a.k.a. Real estate investment trust, REITs
A real estate investment trust: a company that owns property and is generally required to pay most of its taxable income to shareholders as dividends.
A REIT owns or finances income-producing property: offices, apartments, warehouses, hospitals, data centres. Many trade on stock exchanges just like stocks.
In many countries, including the US, REITs must pay out most of their taxable income as dividends, which is why investors hunting for income like them. Their prices are sensitive to interest rates and the health of the property market.
Income from property
- Buy 100 REIT shares at $40: $4,000.
- It pays $2 per share a year in dividends: 100 × $2 = $200.
- Yield: $200 ÷ $4,000 = 5%.
Bottom line: Income from property, paid out like a stock dividend, and the share price can still rise or fall.
Judging a REIT only on its dividend yield. A sky-high yield can be a warning sign that the price has collapsed.
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