What are the benefits of REITS?
In general, REITs and their performance have some common characteristics with small-cap stocks and bond-like investments. The market capitalization of the average REIT on the Wilshire Real Estate Securities Index is $340 million. REITs comprise 6% of the small-cap index, the Russell 2000. However, REITs have advantages over stocks and bonds in terms of dividends: between 1995 and 2000, the average dividend yield on REITs (7.3%) was six times that of the Russell 2000 average dividend. Furthermore, all REITs pay dividends, whereas less than half of the Russell 2000 stocks pay dividends. The long term performance of an individual REIT is determined by the value of its real estate assets at any given time. One of the primary incentives for REIT investment is the low correlation of its value to that of other financial assets. Because of this, REITs possess low relative historical volatility and provide some degree of inflation protection. In addition to the advantages of an investment which
