REITs let you invest in real estate without buying property. They must distribute at least 90% of taxable income to shareholders — which is why yields tend to be relatively high.
Publicly traded REITs are liquid like stocks. They add diversification beyond ordinary equities, though they've correlated more with stocks than pure real estate in some periods.
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Open Decision Lab →Frequently asked questions
Are REIT dividends qualified?
In the US, most REIT dividends are ordinary-income taxed, not qualified. This makes REITs a better fit for tax-advantaged accounts.
Related terms
Dividend
A cash payment a company sends to shareholders, usually quarterly, from its profits.
Diversification
Spreading investments across many assets so one bad outcome doesn't sink the portfolio.
Yield
The income an investment produces relative to its price, expressed as a percentage.
Tax-advantaged account
An account that lets investments grow with reduced or deferred tax.