About REITs

REITs are companies that invest in real estate, real estate financial instruments (such as mortgages) or a combination of both. Like other public companies, public REITs must file quarterly and annual financial reports with the Securities and Exchange Commission. Many REITs trade on major exchanges alongside stocks. Unlike other companies, REITs must distribute at least 90 percent of their taxable income to shareholders, and they do not pay corporate income tax on the distributed dividends.

REIT Advantages

There are several advantages to investing in REITs. Because of their payout requirements, REITs typically provide a consistent stream of dividends. Investing in REITs also provides diversification through exposure to the real estate asset class, which can benefit an investment portfolio. Because many REITs are publicly traded, they offer diversification with the benefit of liquidity, or the ability to sell quickly, that isn’t typically found in traditional real estate investments.

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