High Dividend REITs
REIT is Real Estate Investment Trust, that invests into income producing commercial or living property. It also may lod of portfolio of mortgages. While a REIT may trade on a major index and pay a dividend like any other corporation, their corporate structures and the rules governing them are much, much different from those of a corporation.
The IRS strictly regulates activity and structure of REIT must comply with.
The whole set of rules are quite complex , but we can mention some important points:
75% of total assets must be considered real estate (or cash and treasuries).
75% of the income must come from real estate.
REIT should pay at least 90% of its taxable income in the form of dividends each year.
A REIT must have diversified group of investors, and at least 100 shareholders, and no 5 shareholders can own more than 50% of an entity’s stock.
- Acadia Realty Trust (AKR)
- Regency Centers Corp. (REG)
- Highwoods Properties (HIW)
- Corporate Office Properties Trust (OFC)
- Boston Properties (BXP)
- Realty Income Corp. (O)
- UDR (UDR)
- Hudson Pacific Properties (HPP)
Why to invest in REITs
- Superior Total Returns: Real estate has historically outperformed stocks and bonds. Adding a “value” component to real estate can be exceptionally profitable with the best investors earning >20% per year on average.
- Steady Cash Flow: Income generated by real estate is more consistent and predictable because it is secured by long lease terms.
- Real Assets: Every investment is backed by REAL TANGIBLE assets, and not some speculative high-tech company with questionable “intangible” assets.