REAL ESTATE INVESTMENT TRUST
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A company that owns, operates or finances income-producing real estate. REITs provide all investors the chance to own valuable real estate, present the opportunity to access dividend-based income and total returns, and help communities grow, thrive, and revitalize.
Summary
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate across various property sectors. REITs provide a way for individual investors to earn dividends from real estate investments without having to buy, manage, or finance properties themselves. They must distribute at least 90% of their taxable income to shareholders as dividends, making them attractive income-generating investments. REITs trade on major stock exchanges like regular stocks, offering liquidity that direct real estate ownership cannot provide.
Usage Context
Understanding REITs is important when studying investment diversification, income-generating investments, real estate markets, and portfolio construction strategies.
Common Confusions
- Thinking REITs are the same as direct real estate ownership
- Assuming all REITs invest in the same types of properties
- Confusing REITs with real estate mutual funds
- Believing REITs are risk-free investments
- Not understanding that REIT values can fluctuate like stocks
