A REIT (Real Estate Investment Trust) is a company that owns, operates, or finances income-producing commercial and residential property. The income is generated predominately through leasing activities, but mortgage REITS that provide real estate financing earn money through the interest charged on their mortgage. Most REITs are listed on a publicly traded stock exchange, but some are unlisted or private. This article focuses on listed, public REITs.

In order to qualify as a REIT, a corporation must payout 90% of its taxable income with shareholders in the form of dividends. Many pay 100%. Shareholders pay taxes on the dividends. Because of the generous payout, these types of investments may be an attractive addition to an income-producing portfolio. 

An individual can buy shares in a REIT that focuses on one of the 13 different sectors of real estate, or they can choose a REIT that is more diversified and includes one or more types of real estate. Options include:

Offices

Industrial

Retail

Lodging/Resorts

Residential

Timberland

Healthcare

Self-Storage

Infrastructure

Data Centers

Diversified

Specialized (casinos, theaters, farmland, billboards)

 Mortgages

 

You can buy shares in a REIT the same way that you buy any individual stock, or you can purchase a mutual fund or ETF that consists of multiple individual REITs. On Fidelity.com find stock screener and choose a real estate sector. Do the same thing with their mutual fund and ETF screeners.  Click here to view a recent article with favorite REIT picks. You can also do an Internet search “recommended reits.” Once you find something that looks interesting, go to your favorite online broker (Fidelity, Charles Schwab, etc.) and type in the stock symbol and collect as much information as you can. While you are on an on-line broker’s website, search for information on real estate mutual funds and real estate ETFs. These products will include multiple REITs within it. If you find one that looks interesting, search the Internet for “ is <stock symbol> a good buy” and insert the stock symbol you’re interested in.

You can view the video at https://youtu.be/m06DQayGVWM