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The Pros and Cons of Investing in Real Estate Investment Trusts (REITs)
This asset class has some unique benefits and concerns for investors
All investors worth their salt should consider all options when trying to determine what can make them money for the future. Naturally, all come with varying levels of risk and reward. What about Real Estate Investment Trusts (REITs), which often offer regular dividend payments?
REITs provide investors the opportunity to invest in real estate without the need to actually purchase, manage, or finance properties. They care companies that own/operate real estate, which can vary from residential, commercial and retail among others. Since their inception in the 1960s, they have grown in popularity due to their potential for steady income and portfolio diversification benefits. However, like all investments, they come with their own set of advantages and disadvantages.
The Pros of Investing in REITs
High Dividend Yields: REITs are required by law to distribute at least 90% of their taxable income to shareholders as dividends, which are paid monthly, quarterly or annually. Depending on the success of the REIT, this can result in relatively high dividend yields compared to other investments. Some income-focused investors…
