REIT (Real Estate Investment Trust)

A REIT is a company that owns, operates, or finances income-producing real estate, and trades on an exchange like a stock, giving investors a way to own real estate without buying property directly. To maintain their special tax status, REITs must distribute at least 90% of their taxable income to shareholders as dividends.

That distribution requirement is why REITs tend to carry higher dividend yields than the average stock, and why their fundamentals are usually evaluated using funds from operations (FFO) rather than standard earnings per share, since real estate depreciation distorts GAAP net income for a business that often isn't actually losing value.