Overview of REITs

What REITs are and how they work

Real Estate Investment Trusts (REITs) are companies that own or finance income producing real estate across a range of property sectors. REITs are required to distribute the substantial majority of their taxable income to shareholders as dividends, which makes them a natural fit for income focused portfolios.

This overview explains how REITs work, how they pay dividends, and the role they can play in an income oriented portfolio. It is written for investors who are new to real estate securities as well as those looking for a structured refresher on the asset class.

REITs were established by Congress in 1960 to give all investors access to income producing commercial real estate, an asset class previously reserved for institutions and wealthy individuals. Today the listed REIT market spans apartments, warehouses, data centers, cell towers, hospitals, hotels, and nearly every other property type.

For income investors the appeal is structural: because REITs must distribute the bulk of their taxable income, they have historically delivered dividend yields well above the broad stock market, backed by contractual rent from tenants. The page pairs that explanation with a photo tour of the property types REITs own, from apartment towers to data centers and warehouses, connecting the investment concepts to the physical buildings behind them. It is a starting point built for self directed learners.