Real Estate Investment Trusts or REITs are a specialized form of equity that allow investors to own a portion of a group of real estate properties, although many investors think of them as an alternative to bonds.
Granted special tax status by the Internal Revenue Service, REITs pay out at least 90% of their earnings in the form of dividends to shareholders, often offering healthy dividend yields of the same magnitude as bonds. Furthermore, as REITs acquire more property and increase the value of the properties they own, the value of the equity may increase as well, providing a more attractive total return.
Related Fool Articles
- The Right Way to Play REITs -- Learn about retail, office, industrial, residential, and specialty REITs and how each is affected by different factors in the broader economy.
Recent Mentions on Fool.com
- A Surprising Way to Invest in the Health Boom
- 1 Great REIT to Buy in a Correction
- 3 Important Lessons Investors Need to Learn From Linn Energy's Payout Suspension
- 3 Stocks to Watch in Real Estate, Industrially Speaking
- 5 Things Communications Sales & Leasing Inc.'s Management Wants You to Know
- Don't Be Fooled: Sears Holdings' First Profit in 3 Years Doesn't Mean Much