In the real estate investment industry, a dividend refers to a distribution of earnings made by a real estate investment trust (REIT) or a similar type of company to its shareholders. Dividends are usually issued as cash payments, but can also be in the form of additional shares of stock or other property.
A REIT is a company that owns, operates, or finances income-producing real estate and is required by law to distribute at least 90% of its taxable income to shareholders each year in the form of dividends. This high payout requirement is why REITs are popular among income-focused investors.
The dividend yield, often expressed as an annual percentage, is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. It’s a way for investors to measure the cash flow they’re getting back for each dollar they invest in an equity position.
Dividends are part of the return on investment that shareholders earn from owning shares in REITs or similar investment vehicles.