What is the average return on a REIT.

The average return on a REIT can vary based on the specific type of REIT and the historical period considered. Here's a concise analysis:

1. Historical Performance:
   • Over the past 25 years, REITs have returned an average annual total return of 11.8%, compared to the S&P 500's 10.6%.
   • Over the past 20 years, the FTSE Nareit All Equity REITs Index returned 11.4% annually, outperforming the S&P 500's 10.2%.
2. Long-Term Performance:
   • For the modern REIT era starting in the early 1990s, the longer the time period, the better REITs perform compared to the broader U.S. stock market.
   • REITs have been a favorable choice for long-term returns, often outperforming the broad stock market, especially over longer time horizons.
3. Dividend Impact:
   • Dividends contribute significantly to REIT returns. About half of REITs' total returns come from dividends.
   • REIT dividends are often higher than the average stock on the S&P 500.
4. Volatility:
   • REITs, particularly dividend-paying ones, tend to be less volatile than the broader stock market.
   • Dividend-paying stocks, including REITs, had a lower beta (0.94) than the S&P 500, indicating less volatility.

In conclusion, the average return on a REIT over various historical periods suggests that they can be a viable long-term investment option, offering potentially higher returns than the broader stock market, particularly when considering dividends and long-term performance. However, investors should consider the specific type of REIT and the economic conditions when assessing their investment potential.