REITs are well suited to income-oriented investors, due to their historically high and reliable dividend payouts that have generally increased over time and have often grown faster that the rate of inflation.
Real estate companies generally earn reliable streams of income from long and stable tenant leases, and REITs must distribute at least 90 percent of their taxable income to shareholders as dividends.
This high dividend payout requirement means a larger share of REIT investment (link to REIT Investment performance page) returns come from dividends when compared with other stocks. In fact, over the long-term , about half of listed REIT total returns have come from dividends, compared to less than one-fourth for the S&P 500.
Reinvesting REIT dividends can help retirement savers grow their portfolio’s investment, and historically steady REIT dividend income can help retirees meet their living expenses.
REIT dividends historically have provided:
- Wealth Accumulation
- Reliable Income Returns
- Reduced Portfolio Volatility
- Inflation Protection