For retail investors, 2025 could be considered the year of tech stocks. But real estate investment trusts (REITs) show promise in today’s market, particularly as a way to stabilize a portfolio and add dividend-earning assets.
Here’s some background on REITs and some things you need to know if you’re considering adding REITs to your portfolio this year.
“Commercial real estate is critical for any investor to own because it provides essential benefits, including a steady stream of income in the form of dividends, competitive performance, and meaningful diversification from stock and bonds,” said John Worth, the executive vice president for research and investor outreach of Nareit. “REITs offer investors the opportunity to receive all the benefits of commercial real estate without the hassle of buying, managing, or financing a building.”
The Nareit 2026 REIT Outlook revealed that REITs delivered “strong operational performance throughout 2025,” with continually high interest rates, sound fundamentals and high dividends.
“By law, REITs must pay out at least 90% of their taxable income to shareholders and many pay out 100%, which often results in higher and more consistent dividends than many traditional stocks,” Worth explained.
That being said, here are a few other things to know if you’re considering investing in REITs this year.
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Most people don’t realize the large role REITs play in the investment market. More than 70% of U.S. pensions incorporate REITs into their real estate strategies, according to Nareit’s report, and more than 75% of pension plans with more than $25 billion in assets hold REITs.
If your retirement savings included a defined contribution plan like a 401(k), you may want to look for REIT funds and ask for them to be included as part of your holdings. “Retirement accounts are a practical, tax-efficient way for investors to increase exposure to REITs and capture income and diversification benefits over the long term,” Worth said.
In the past 10 years, U.S. REITs have outperformed European and Asian REITs, but this shifted in 2025. North and South America REITs delivered a return of 5.5%, compared with 28% for REITs in Asia and 19.9% in Europe, according to the Nareit report.
“U.S. REITs are a strong foundation,” Worth said. “They’re familiar, transparent, offer competitive performance, and have a long track record of providing income. But adding some international REIT exposure can make a portfolio more resilient.”
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