REITs are securities that trade like a stock and invest in real estate directly through property ownership or mortgages. Consequently, revenue are mainly generated through rents or interest on mortgage loans. To qualify for special tax considerations, the asset also distributes the majority of income, about 90% of taxable profits, to investors as dividends.
There are pockets of strength within the REIT space investors should take note of.
“Specifically, two sub-industries within the REIT sector—health care and residential REITs—may benefit income investors in the current pro-growth environment and offer healthy yields,” adds BlackRock.
IYR allocates over 22% of its combined weight to health care and residential REITs.
For more information on real estate investment trusts, visit our REITs category.