Since 1981, REITs, as represented by the NAREIT Composite REIT Index, have earned an average annual total return of 13.23 percent. The "Price and Income Returns" chart illustrates that 9.02 percentage points, representing 68 percent of the average annual total return, have come from dividends paid to shareholders. The healthy dividends of real estate stocks help make them less volatile than other stocks and provide income and stability to an investor's overall portfolio.

What do REIT dividends mean to shareholders in actual dollars? As shown in the second chart below, a $1,000 investment in a broadly diversified portfolio of REIT stocks in December 1981 would have increased to $2,040 by Nov. 30, 2005, if the investor chose to spend the dividends. However, if the $1,000 was invested in the same portfolio of REITs, with the dividends reinvested, the investment would be $15,270 today—a substantial return on the original investment.

*Data through November Source: NAREIT

Source: NAREIT