One of the strongest cases for investing in real estate investment trusts (REITs) is the reliable income from typically high-yield dividends. REITs are required to pay a significant portion of their earnings (usually over 90%) in the form of a dividend.
However, REITs are sensitive to interest rates. Specifically, these companies are sensitive to the rates on long-term Treasury notes, which affect the discount rates applied to future cash flows and ease borrowing costs for sectors like real estate.
