Real Estate Investment Trusts (REITs) borrow money to buy properties and then collect rent, which they use to pay dividends. For tax purposes, REITs must pay 90% of their income as dividends each year, which means they have really high dividend yields.
Unfortunately, REITs haven’t been showing us the love back. In the last five years, REITs are up about 34%… which doesn’t sound terrible at first. But compared to the overall market, which has almost doubled, it’s awful.
This post originally appeared at Dividend Stocks Research.