The real estate sector is often considered fertile for income investors. That view is likely being amplified against the backdrop of expectations that the Fed has several more interest rate cuts ahead of it.
However, the widely followed Dow Jones U.S. Real Estate Capped Index sports a trailing 12-month dividend of just 2.32%. Sure, that’s roughly double what investors find on a basic S&P 500 ETF. But 2.32% is by no means jaw-dropping. Good thing there are avenues for boosting the real estate sector income proposition. One such avenue is the NEOS Real Estate High Income ETF (IYRI).
Part of the famed lineup of NEOS options-based income-generating ETFs, IYRI came to market in January. It’s off to a solid start as highlighted by an assets under management tally of $136.4 million. That’s because the ETF, which links to the aforementioned Dow Jones U.S. Real Estate Capped Index, delivers the income goods. It yields an impressive 11.71%.
IYRI Could Be Ready for Its Close-Up
IYRI is a covered call ETF, so it offers investors some upside participation should real estate investment trusts (REITs) rally. That’s a distinct possibility as soon as this week because the Federal Reserve’s meeting concludes on October 29.
However, since it’s not a pure equity play, IYRI is significantly less dependent on Fed assistance than are traditional REIT ETFs. That’s a positive because there are no guarantees the central bank will comply. The good news is that sentiment is improving for REITs, as highlighted by strong access to capital markets.
“U.S. REITs raised $21.3 billion from secondary debt and equity offerings in the third quarter of 2025. Of that total, $14.0 billion came from debt offerings, $6.6 billion came from common equity offerings, and $740 million came from preferred equity offerings,” according to Nareit.
Still, it’s hard to get around the fact that REITs are a rate-sensitive asset class. While that sensitivity is diminished with IYRI’s due to the ETF’s structure, it could be a near-term catalyst for the NEOS fund should the Fed deliver as expected.
“Lower interest rates play a critical role in shaping REIT performance. By reducing borrowing costs, rate cuts can enhance property values, lower financing expenses, and strengthen dividend-paying business models, which are some of the key drivers of REIT performance. For nearly five decades, REITs have consistently outpaced broader US stocks following Fed easing cycles,” according to Invesco.
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