A REIT is a company that owns income-producing real estate and trades on the stock market — letting you collect rent-like dividends from malls, apartments and warehouses without ever buying a building.
A REIT (Real Estate Investment Trust, pronounced “reet”) is a company that owns, operates or finances income-producing property — apartments, offices, malls, warehouses, data centers, cell towers. Because most REITs trade on a stock exchange, you can buy a share of a giant real-estate portfolio for the price of one stock, instead of needing the capital to buy a building yourself.
To qualify as a REIT and skip corporate income tax, the trust must pay out at least 90% of its taxable income to shareholders as dividends. That legal requirement is why REITs are famous for high dividend yields — they are essentially pass-through income machines.
Most are equity REITs: they own property and collect rent. Mortgage REITs (mREITs) instead lend money for real estate and earn interest — a different, often riskier and more rate-sensitive business. Many investors get REIT exposure through an ETF that holds dozens of them.
REITs aren't risk-free. Their prices fall when interest rates rise (income investments compete with bonds), they're sensitive to the property cycle, and a struggling sector — like office space — can cut dividends. Like any single stock, they belong inside a diversified portfolio.
Practice income investing: REITs are dividend machines. Try buy-and-hold with reinvested payouts in the dividend investing game to feel how dividend compounding works.
Not advice: educational content only. For authoritative basics see the SEC at investor.gov.
Related: what is dividend yield, what are dividends, and what is a bond.
A REIT is a company that owns income-producing real estate and trades on the stock market, so you can buy a share and collect rent-like dividends without buying a building yourself.
By law a REIT must pay out at least 90% of its taxable income to shareholders as dividends to keep its tax-advantaged status, which makes REIT yields unusually high.
An equity REIT owns property and collects rent. A mortgage REIT lends money for real estate and earns interest, which is generally more sensitive to interest rates.
Yes, REIT prices can fall when interest rates rise, they follow the property cycle, and a weak sector can force dividend cuts — so they belong in a diversified portfolio.