Real Estate Investment Trusts or REITs own, operate, or finance real estate and generate rental income. REITs are required to pay out most of the profits as dividends. So, they offer a steady income stream.
The major market indexes have been highly volatile due to the Fed’s decision to raise interest rates aggressively to control inflation, which has hit a multi-decade high, and the tensions between the U.S. and Russia over Ukraine. So, investing in REITs can be a good strategy to hedge one’s portfolio against market volatility. In addition, real estate rents and property values increase during inflationary circumstances, helping REITs to increase their dividends. Furthermore, REIT dividends have outpaced inflation in all but two of the last 20 years as measured by the Consumer Price Index.
