What are the advantages of investing in REITs?
Matthew Barrera
Updated on March 31, 2026
REITs offer investors the benefits of real estate investment along with the ease and advantages of investing in publicly traded stock. REITs have historically provided investors dividend-based income, competitive market performance, transparency, liquidity, inflation protection and portfolio diversification.
When should you invest in REITs?
Since REITs are required to pay at least 90% of taxable income to shareholders, they tend to have above-average dividend yields. This can make REITs an excellent choice for investors who need income or want to reinvest their dividends and let their gains compound over time.
Who are the beneficiaries of a REIT?
shareholders
Like any trust, a REIT has beneficiaries — the shareholders. To be considered a REIT, these trusts must follow the requirements of the Real Estate Investment Trust Act of 1960. This law states that if the trusts follow certain criteria, they’re exempt from paying corporate income tax and capital gains taxes.
Who is the owner of REIT?
They are owners of real estate properties and lease them to companies or individuals to make money. The income is then distributed among the REIT investors as a dividend.
How does investing in a REIT work?
REITs must pay out at least 90 % of their taxable income to shareholders—and most pay out 100 %. In turn, shareholders pay the income taxes on those dividends. mREITs (or mortgage REITs) don’t own real estate directly, instead they finance real estate and earn income from the interest on these investments.
What is income of the trust?
Trust income is what the trustee can actually distribute. Trustees can’t just distribute any amount they fancy. They can only distribute trust income – distributable trust income – as defined in the trust deed. If the trust deed says that something is not income, then it is not income.
Are REITs less risky than stocks?
Publicly traded REITs offer investors a way to add real estate to an investment portfolio and earn an attractive dividend. Publicly traded REITs are a safer play than their non-exchange counterparts, but there are still risks.
