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

No, Real estate investment trust is used to provide its 90% of the income in form of dividend so it will have to distribute the income which has been earned by it, in form of dividend to the shareholders so even if he is making 5% rate of return and he can not make the 7% rate of return because even after the adjustment of the 90% criteria with it the investor is not going to get his desired rate of return because real estate investment trust is used to distribution of its 90% of income as dividend. His maximum return in REIT can only be (5/90%)= 5.555%.

Hence it is not easier to get the rest 2% rate of return in real estate investment trust.