Real estate investment trusts, also known as REITs, are traded on exchanges just like your average stock. But there are a few major differences between them and stocks where dividends are concerned. REITs tend to pay above-average dividends, and they also have a few unique tax implications.
When it comes to investing in a REIT, the key is to find a higher dividend yield. So, when you are looking to invest in a REIT, which ones should you go with? It depends on the REIT as well as the type of asset that you are looking at.
Annaly Capital Management
One of the strongest assets out there for REITs is in the mortgage and related assets field. Mortgages are a mainstay no matter how you cut it – whether they be residential, commercial, or otherwise – and the potential for dividends is there.
The dividend yield on Annaly is particularly high at just under 12%. For context, the average dividend paid by stocks that are listed on the S&P 500 is 1.9%.
Digital Realty Trust
More and more, data centers are becoming a valuable investment in terms of REITs. With the shift to an online community becoming stronger by the day, data centers are becoming a necessity. That means capitalizing on the dividends from businesses such as Digital Realty Trust.
Though they have a dividend yield of 3.6%, that number is sure to rise in the near future. Data centers are going to become more essential than ever before and now is the time to get in on these REITs.
Simon Property Group
Shopping malls are still a great place to invest in terms of REITs. With a dividend yield of 4.6%, you can expect strong returns on commercial real estate. The concern going forward is the shift to online shopping.
Places such as Amazon and Walmart are making it easier for people to get everything that they need with a few clicks. It bears watching what impact this shift will have on REITs with assets such as shopping malls.