What is the average return on a REIT?

Long-term REIT returns vary by period, but the broad FTSE Nareit All Equity REITs Index has delivered roughly 10% to 13% annualized total returns over the past 25- to 50-year periods. However, REIT total returns are somewhat more modest (7% to 8.5%) over the last 5- to 20-year periods.

Are REIT investments better than stock investments?

According to data from Nareit (FTSE Nareit All Equity REITs Index), REITs have been better investments than stocks over the last 25- and 50- year periods (as measured by total return). However, stocks have led in the most recent 1-, 5-, 10-, and 20-year periods.

Do REITS outperform the S&P 500?

According to Nareit data, REITs have outperformed the S&P 500 over the past 25- and 50-year periods (by total return). However, REITs have underperformed the S&P 500 in more recent periods (over the past 1, 5, 10, and 20 years).

REITs vs. Stocks: What Does the Data Say?

There has been considerable debate about whether stock or real estate is a better long-term investment. Many investors believe that investing in stocks offers the best long-term return potential.

For the most part, that’s true. However, over the very long term (25 and 50 years), REITs have outperformed stocks.

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Dividends Per Share

The dividends a company pays out per share and a commonly used per-share metric.

Dividends have an even greater impact on REIT returns because these entities must distribute 90% of their taxable net income to investors as dividends to remain in compliance with IRS guidelines. About half of REITs' total returns come from dividends, according to Nareit. That compares to less than one-fourth of the S&P 500’s return.

Dividend growth tends to drive higher returns. That would also help explain the REIT sector's strong long-term performance, as many REITs have strong track records of increasing dividends.

For example, three REITs qualify as Dividend Aristocrats® (the term Dividend Aristocrats® is a registered trademark of Standard & Poor's Financial Services LLC), which are S&P 500 members with at least 25 years of consecutive dividend increases. One of those REITs also qualifies as a Dividend King, a company that has had 50 or more consecutive years of dividend increases. Additionally, more than a dozen REITs qualify as Dividend Achievers, which are stocks that have delivered at least a decade of steady annual dividend growth.

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Beta

A measure of a stock’s volatility compared to the overall market, showing if it tends to move more or less than the market.

According to the same data from Hartford Funds and Ned Davis Research, dividend payers had a lower beta (0.94) than nonpayers (1.17). Meanwhile, dividend growers and initiators had a lower beta of 0.88, indicating they're less volatile than the average dividend payer.

Given that data, it's no surprise that most REITs have a lower beta than the S&P 500. The long-term beta of the REIT sector is 0.75. Many REITs have considerably lower betas. For example, of the 16 REITs currently in the S&P 500 with trading histories dating back to 1994, 7 had betas below 0.75, while all but 2 had betas below 1.0. Those outliers were in the timber and lodging sectors, which have more economically sensitive cash flows.

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This subgroup delivered the second-worst total return among REITs in 2025 (-14%) and the worst performance since 2020 (-4.1% annualized). While the sector has tried to bounce back (up 21.5% in 2024), demand for office space has remained weak since the pandemic, as many companies have adopted hybrid or remote work, reducing their need for office space. That’s having a significant impact on the office sector. Occupancy and rental rates have fallen, cutting into the cash flows of office REITs and the value of their properties.

Data Center REITs and Other Subgroups

Nareit has added several other property types to its tracking in recent years: data centers, gaming, specialty, telecommunications, and timberland. Data center REITs and specialty REITs have delivered the best total returns since Nareit started tracking these new property classes.

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How to Value a REIT

Valuation is an important consideration when buying any stock. Here's how to look at REITs.

Best Diversified REITs for 2026 and How to Invest

When it comes to REITs, don't put all your eggs in one property -- diversify!

Best Data Center REITs for 2026 and How to Invest

Investing in data center REITs can come with great rewards as you support the expansion of cutting-edge connected technologies.

Best REIT Mutual Funds for 2026 and How to Invest

These REIT mutual funds have a long history of delivering superior performance for investors.

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FAQs

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

Matt DiLallo has positions in Digital Realty Trust, Equinix, Public Storage, and Realty Income. The Motley Fool has positions in and recommends Digital Realty Trust, Equinix, and Realty Income. The Motley Fool recommends Extra Space Storage. The Motley Fool has a disclosure policy.

REITs vs. Stocks: Everything You Need to Know

Which investment is right for you? Breaking down REITs and stocks.

Key Points

Dividends Per Share

Beta

Data Center REITs and Other Subgroups

How to Value a REIT

Best Diversified REITs for 2026 and How to Invest

Best Data Center REITs for 2026 and How to Invest

Best REIT Mutual Funds for 2026 and How to Invest

FAQs

About the Author

Read Next

Stocks Mentioned

Premium Investing Services

How to Value a REIT

Best Diversified REITs for 2026 and How to Invest

Best Data Center REITs for 2026 and How to Invest

Best REIT Mutual Funds for 2026 and How to Invest

FAQs

What is the average return on a REIT?

Are REIT investments better than stock investments?

Do REITS outperform the S&P 500?

REIT Investing vs. Stocks: What 50 Years of Returns Data Shows

Dividends Account for About Half of All REIT Returns

Most REITs Are Less Volatile Than the Broader Stock Market

Which REIT Subgroups Have Beaten the Market Over 30 Years?

Self-Storage, Industrial, Residential, and Office Subsections

Self-Storage

Industrial REITs

Residential REITs

Office REITs

Data Center REITs and Other Subgroups

Why REITs Might Fit In a Balanced Portfolio

How to Invest in REITs

Related REIT Topics

The Top-Performing REITs Over the Past Two Decades