REITs offer lucrative returns with dividend payments, outperforming stocks long-term

From Nasdaq: 2025-03-30 10:06:00

Real estate investment trusts (REITs) are favorable investment options, with a portfolio of income-generating commercial real estate that pays dividends and funds additional properties. REITs have historically outperformed stocks in the long term, making them a lucrative choice for investors. Dividend payments are a key driver of returns, with three factors influencing a REIT’s ability to increase dividends: portfolio quality, dividend payout ratio, and balance sheet strength. Investing in REITs can be done through individual stocks or a REIT ETF like Vanguard Real Estate ETF, offering exposure to a variety of REITs.

For a potentially higher return, building a portfolio of high-quality REITs like Realty Income, Mid-America Apartment Communities, Prologis, and Equinix that have a record of increasing dividends is recommended. These REITs benefit from growing demand in various sectors, such as residential, industrial, and data centers. This approach can lead to significant long-term gains for investors.

Investors seeking to capitalize on REITs should consider investing in dividend growers and initiators, as they historically yield higher returns compared to companies with no change or cuts in dividend policy. By strategically selecting REITs with growing dividends, investors can maximize their gains in the real estate sector.



Read more at Nasdaq: The Ultimate Guide to REITs: Strategies to Buy, Hold, and Profit