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.

Best high-yield REITs:
  • 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.
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