REIT (Real Estate Investment Trust)
A company that owns, operates, or finances income-producing real estate and distributes most profits as dividends.
Definition
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate across various property sectors. REITs are required by law to distribute at least 90% of their taxable income to shareholders as dividends, making them popular income investments. They trade on major stock exchanges like regular stocks, providing liquidity that direct real estate ownership lacks. REIT sectors include residential, commercial, healthcare, data centers, cell towers, and industrial properties. REITs offer diversification, regular income, and inflation protection since rents tend to rise with inflation. The average REIT dividend yield is typically 3-5%, higher than the S&P 500 average.
Related Terms
Dividend
A portion of a company's earnings distributed to shareholders.
InvestingDividend Yield
The annual dividend payment divided by the stock price, expressed as a percentage.
InvestingDiversification
Spreading investments across various assets to reduce risk.
Real EstateMortgage
A loan used to purchase real estate, where the property serves as collateral.