Real Estate Investment Trust (REIT)
What It Is:
A real estate investment trust (REIT) is a closed-end real estate such as buildings, land and real securities.company that owns assets related to
REITs sell on the major common stock.exchanges just like
How It Works/Example:
REITs raise shares on an exchange. Private REITs must find individual investors.from a collection of investors and provide them with access to real . Publically traded REITs raise for their portfolios by selling
Mortgage REITs, which invest primarily in mortgages and other debt products related to , receive income from the payments borrowers make toward the mortgages the REIT owns. Mortgage REITs are more akin to a bond rather than a straight .
Why It Matters:
REITs are a powerful way for individuals to invest in realliquid (because they can be bought and sold freely on an open ) while still the relatively predictable stream one comes to expect when collecting rent from a tenant.. As compared to privately owning a building, of REITs are more
Because of the high amount of income the REIT must distribute, REITs are associated with high dividend yields. They also have tangible assets (land, buildings, etc.), which makes them a relatively stable, low-volatility equity. Because of this, they often grow more slowly than the S&P and Dow Jones Industrial Average (DJIA).