REITs As An Asset Class
REITs (Real Estate Investment Trusts) are companies that own or finance real estate. These companies, by law, have to pay out at least 90% of their income (mostly rental income) as dividends to their shareholders. Since these companies’ main business is in real estate that produces regular rental income ( (75% of their total asset should be in real estate), they are distinctly different from other companies like technology, industrial or health care that relies on selling products and services for profits.
Traditionally, REITs are classified as a sector in financial industry. In fact, even today, in stock screening tools provided by many brokerages, they are treated as an special sector. However, MyPlanIQ believes they deserve to be a distinct asset class and have treated them as such.
In the following, we look at the two most important factors that determine an asset class.
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