REITs provide natural protection against inflation. Real estate rents and values tend to increase when prices do. This supports REIT dividend growth and provides a reliable stream of income even during inflationary periods.
REIT dividends have outpaced inflation as measured by the Consumer Price Index in all but two of the last twenty years.
A practical way of measuring the inflation protection provided by REITs is to directly compare REIT dividend growth with inflation. In all but two of the last 20 years, REITs' dividend increases have outpaced inflation as measured by the Consumer Price Index.
Other assets such as commodities and Treasury inflation-protected securities (TIPS) can also provide good inflation protection. Even stocks can be an important part in a portfolio that protects investors against inflation shocks.
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