The 6 Best REIT Funds to Buy
Rising interest rates and the decline of shopping malls have weighed on real estate investment trusts (REITs) over the past few years. The good news is that many REITs - special tax-advantaged businesses provide investors with exposure to real estate - are now trading at bargain prices.
That makes now an opportune time to jump broadly into this traditionally dividend-friendly asset class via mutual and exchange-traded funds.
REITs - which own and often operate real estate such as apartments, office buildings, malls and industrial properties - get certain tax breaks, but in return must pass through 90% of their income to shareholders every year. That makes them good yield plays; currently, the average REIT yields 4%, which is higher than most stock or high-quality bond yields.
They also look cheap right now. While the Standard & Poor's 500-stock index is trading at roughly 24 times trailing 12-month earnings, the S&P U.S. REIT sector is changing hands at a
