REIT Dividend Yields: How They Work and What to Expect

At the end of September 2026, U.S. equity REITs yielded 3.93% on average and the S&P 500 yielded 1.03%, according to Nareit; mortgage REITs, which hold real estate loans instead of buildings, yielded 15.68%. By property type, yields ran from 2.46% for data center REITs to 8.20% for gaming REITs. REITs pay more because federal tax law requires them to pay out at least 90% of their taxable income each year. A yield far above its sector's average can come before a cut: Medical Properties Trust yielded 11.50% in July 2023, nearly double the health care REIT average, and then cut its quarterly dividend from $0.29 to $0.15.

How is a REIT's dividend yield calculated?

A REIT, or real estate investment trust, is a company that owns or finances income-producing property; what REITs are and how they work covers the basics. Nareit defines a REIT's dividend yield as its current dividend rate, annualized, divided by its share price. A REIT that pays $0.75 a quarter ($3.00 a year) and trades at $60 yields 5.0%:

• If the price falls to $50 and the dividend stays the same, the yield rises to 6.0%.
• If the price rises to $75, the yield falls to 4.0%.

The dividend did not change in either case; only the price did. Index yields move the same way when prices swing, though dividend changes also affect them. In September 2026, the FTSE Nareit All Equity REITs index lost 5.7% including dividends, and its yield rose from 3.68% at the end of August to 3.93%. Over a full year the change can be larger: the index's share prices rose 37.29% in 2021, when its yield ended the year at 2.59%, and fell 27.46% in 2022, when its yield ended at 3.97%.

Fund pages can show several yields for the same fund. On October 22, 2026, State Street listed three for its Real Estate Select Sector SPDR ETF (XLRE):

• 30-day SEC yield, 3.37%: the fund's net investment income over the latest 30 days, after expenses, divided by its share price and stated as an annual rate.
• Distribution yield, 3.39%: the distributions paid over the past 365 days divided by the fund's share value.
• Index dividend yield, 3.50%: the current annual dividends of the stocks in its index divided by their prices.

What yield should you expect from each type of REIT?

Nareit's index data for September 30, 2026, by property type:

Yields partly track the year's returns. Data center REITs, with a 28.0% total return through September, have the lowest yield of any property type, and gaming REITs, with a 12.9% loss, have the highest. Lodging REITs returned 37.6% and still yield 3.96%, close to the 3.93% for all equity REITs. Types of REITs explained describes what each type owns.

Dividends have supplied most of what REITs earned for their owners. Over the 10 years through August 2026, equity REITs returned 5.82% a year with dividends included, while their share prices alone rose 1.94% a year.

A higher yield has not meant a higher total return. Over the same 10 years, mortgage REIT share prices fell 7.54% a year, so their total return including dividends was 3.19% a year, well below equity REITs' 5.82%.

Why do REIT yields run higher than the S&P 500's?

Federal tax law requires a REIT to pay dividends equal to at least 90% of its taxable income, not counting net capital gains, to keep its REIT status, and the REIT deducts those dividends in figuring its own tax. Most other companies in the S&P 500 have no payout requirement and can keep their earnings. Because REITs pay out most of what they earn, they raise outside money to grow: U.S. REITs raised $62.7 billion by selling stock and debt in the first eight months of 2026, according to Nareit.

In a taxable account, taxes take back part of the higher yield. The SEC notes that REIT dividends are generally taxed as ordinary income, without the lower rates that apply to most other corporate dividends. Nareit reports that 79% of the dividends REITs paid for 2025 were ordinary income, with 77% eligible for the Section 199A deduction, which lets individuals deduct part of those dividends, and the rest were long-term capital gains (11%) or return of capital (10%). REIT tax treatment explains each part.

Bonds are the other comparison. At the end of September 2026, the 3.93% equity REIT yield sat 1.34 percentage points below the 10-year Treasury yield of 5.27%. From 1990 through August 2026, the REIT yield averaged 0.89 points above the 10-year Treasury, according to Nareit.

What signals that a high yield may be cut?

A yield well above similar REITs can mean other investors expect a cut. Medical Properties Trust (MPW), which owns hospital buildings it leases to operators, showed these warning signs in 2023:

1. Yield far above its sector. In Nareit's data for July 31, 2023, MPW yielded 11.50%, while the health care REITs in the same table averaged 5.98%.
2. A dividend that used up nearly all its earnings. MPW's first-quarter 2023 dividend of $0.29 a share took 94% of its $0.31 of funds from operations (FFO), Nareit's standard REIT earnings measure, and 97% of its $0.30 of adjusted FFO (AFFO), the company's own version, which also removes noncash items such as straight-line rent (rent counted as income before it is billed). Nareit says FFO does not measure cash generated or the ability to pay dividends, so treat a payout near 100% as a reason to read the cash flow statement; FFO and AFFO explained shows how to figure the payout ratio.
3. Heavy debt. In the same Nareit table, MPW's debt ratio, total debt divided by debt plus the market value of its shares, was 64.8%, against 43.3% for its sector. For all equity REITs combined, the figure was 34.4% in the second quarter of 2026.
4. A falling share price. MPW's total return over the 12 months to July 31, 2023 was -34.58%. A falling price lifts the yield even when the dividend has not changed.

MPW then cut its quarterly dividend from $0.29 to $0.15. Its third-quarter 2023 results reported the new dividend as 50% of that quarter's AFFO and paired it with a plan to raise about $2 billion over the next 12 months to repay debt coming due.

To screen a REIT you own or are considering, compare its yield with its sector's yield in the table above, then check its payout ratio, debt ratio, and cash flow statement in its latest quarterly report. If you are building retirement income from REIT dividends, see REIT investing in retirement for setting up the plan.