Real estate investment trusts, or REITs, can be a great source of both income and growth in your portfolio; they can also provide financial protection when times get rough.
There are two main types of REITs: those that own property and those that invest in mortgages. Both have their own pros and cons. Mortgage REITs tend to pay high dividend yields but are vulnerable to certain market conditions, such as changing interest rates. Property REITs pay lower dividends but offer greater upside potential as the values of their real estate holdings increase. The latter also tend to be less volatile, since the income they produce is more consistent.
To give you an overview of the various REITs in the market, here is a mix of seven of the better-known REITs that pay strong dividends, as well as some reasons you might want to consider each of them for your own portfolio.
Matthew Frankel owns shares of FedEx, PennyMac Mortgage Investment Trust, and Realty Income.. The Motley Fool recommends Amazon.com and FedEx. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.