Why REET Outperforms SRET for Long-Term Income Investors: A Deep Dive into Dividend Sustainability, Cost Efficiency, and Diversification

Investors seeking stable, scalable income in volatile markets often turn to real estate investment trusts (REITs) for their high yields and diversification potential. Two popular ETFs in this space—iShares Global REIT ETF (REET) and Global X SuperDividend REIT ETF (SRET)—offer distinct approaches to capitalizing on real estate. While both aim to deliver income, REET emerges as the superior choice for risk-averse, long-term investors due to its stronger dividend sustainability, lower expense ratios, and more balanced portfolio diversification.

Dividend Sustainability: Quality Over Yield

For income investors, dividend sustainability is paramount. SRET, with its 8.32% dividend yield as of July 2025, appears attractive at first glance. However, its historical performance reveals a mixed record: over the past three years, SRET has raised its dividend only three times while cutting it five times. This volatility raises questions about its ability to maintain consistent payouts during economic downturns or rising interest rates.

REET, by contrast, focuses on broader real estate exposure, including global REITs with strong balance sheets and disciplined capital structures. While its dividend yield is lower (not disclosed in the search results), its underlying holdings—such as data centers, senior housing, and industrial properties—are sectors with resilient demand and long-term growth potential. These assets are less prone to cyclical shocks, ensuring more predictable cash flows for dividend sustainability.

Expense Ratios: The Cost of Compounding

Expense ratios directly impact long-term returns, especially for income-focused investors who rely on compounding. REET's 0.14% expense ratio is significantly lower than SRET's 0.59%, a 76% cost advantage. Over decades, this difference can translate to thousands of dollars in savings for investors.

For example, a $100,000 investment in REET would incur $140 in annual fees, while the same in SRET would cost $590. Over 20 years, with an 8% annual return, the SRET investor would pay $11,800 in fees versus $2,800 for REET, reducing their total returns by $9,000. This stark contrast underscores the importance of cost efficiency in income investing.

Portfolio Diversification: Balancing Risk and Reward

SRET's concentration in high-yield REITs exposes it to sector-specific risks. While its 30-REIT portfolio is diversified across sectors, its equal-weighted approach can amplify volatility if a single sector underperforms. For instance, the lodging and resort sector—historically one of SRET's holdings—remains highly cyclical, with returns fluctuating sharply during economic downturns or shifts in consumer behavior.

REET, by contrast, offers a globally diversified portfolio spanning residential, commercial, industrial, and healthcare real estate. Its exposure to 1,200+ REITs (as of 2025) spreads risk across geographic regions and property types. This diversification mitigates concentration risk, as declines in one sector (e.g., retail) are often offset by gains in another (e.g., data centers). Additionally, REET's focus on markets with stable demographic trends—such as senior housing and industrial logistics—ensures steady rental income, further supporting dividend consistency.

Why REET Is the Superior Choice for Long-Term Investors

While SRET appeals to investors seeking high yields, its higher costs, yield volatility, and sector concentration make it a riskier bet. REET's lower expense ratio, diversified portfolio, and focus on resilient real estate sectors position it as a more sustainable option for long-term income growth.

For risk-averse investors, REET's disciplined approach to capital management and global diversification offers a buffer against market volatility. Its emphasis on sectors like data centers and senior housing—driven by secular trends such as AI adoption and aging populations—ensures long-term scalability. SRET, while potentially rewarding, requires closer monitoring and a higher risk tolerance to navigate its yield fluctuations and sector-specific challenges.

Final Takeaway

In a market where stability and predictability are prized, REET's combination of low costs, broad diversification, and sector resilience makes it the superior choice for income-focused investors. While SRET may deliver higher yields in favorable conditions, its structural risks and higher fees make it a less attractive option for those prioritizing long-term security. For investors seeking a balanced, scalable income stream, REET offers a compelling path forward.