Best REIT Dividends

Real estate investment trusts are required to distribute at least 90% of taxable income to shareholders, which is why they yield far more than the broad market and why they dominate any list of high-income equities. Buying a REIT is closer to buying a portfolio of rent-producing property than to buying an operating company, and the dividend behaves accordingly — relatively predictable while leases hold, and sensitive to interest rates, occupancy and the cost of refinancing debt.

One column on this page needs a caveat. Payout ratios for REITs routinely exceed 100% of reported earnings, and this is normal rather than a warning sign. Accounting rules require large depreciation charges against property that is often appreciating in reality, which pushes reported earnings well below the cash the business actually collects. Analysts therefore judge REIT dividends against funds from operations rather than earnings. We show the standard payout ratio for consistency across the site, but do not read a REIT's figure the way you would read a manufacturer's.

The sector spans very different businesses — warehouses, data centres, apartments, hospitals, shopping centres, cell towers — whose fortunes diverge sharply. Sector-level yield comparisons are less meaningful here than in most industries.