REIT (Real Estate Investment Trust)
Definition
A company that owns, operates, or finances income-producing real estate. REITs trade like stocks but give you exposure to real estate without buying property. By law, they must pay out at least 90% of taxable income as dividends, making them popular income investments.
Why It Matters
REITs let you invest in real estate with as little as the price of one share — no down payment, no tenants, no maintenance. They provide diversification beyond stocks and bonds, plus typically higher dividend yields (3-6% is common).
Example
Buy $10,000 of a diversified REIT ETF yielding 4%. You own a slice of hundreds of properties — offices, apartments, malls, data centers. You receive $400/year in dividends plus potential price appreciation, all without ever dealing with a leaky roof.