Question

if a goal of ours is to average 7% on our investment portfolio and REIT's pay 5%, just in dividends, wouldn't it be easier to get the 7% knowing we are 71% of the way there with buying REIT's?

Answer 1

Real estate investment trust is required to pay out 90% of their income in form of the Dividend and then if I am making a 5% rate of return on real estate investment trust portfolio that overall rate of return I can make is(5/90%)= 5.55%.

It can be summarised that we cannot make a 7% rate of return by investing into real estate investment trust because it is not easier that even after their paying out with the dividend which is mandatory for the 90% of their overall earnings, they cannot stretch is to 7% rate of return and hence and given statement is false as it would not be easier.