Intro B&H101 Under the Oak The Mom Chronicles Wall Street History Week in Review Glossary Financial Planning Understand Taxes   "BUYandHOLD" Tax FAQ   The 13 Steps to Investing Foolishly   Carlson on Taxes Past Questions Main Question: In the last two columns we discussed dividend paying stocks -- both common and preferreds -- and how to find them, evaluate them and add them to your portfolio. CLICK HERE to read. This week we take a look at another category of high dividend stocks -- Real Estate Investment Trusts (REITs). A BuyandHolder Answer: REITs Although REITs trade on the exchanges, they are in some ways more like a mutual fund than a stock -- each individual REIT owns a variety of properties or mortgages, or both. REITs were created by Congress in the 1960s to give individuals a way to invest in commercial real estate. And it's true -- purchasing a REIT stocks is certainly a whole lot easier than buying an office building or a rental apartment house. While some REITs are high in risk, many are considered sound investments. REITs have a unique tax structure that directly benefits stockholders. They avoid taxation as long as they pay out 95% of their income to shareholders - they do that in the form of dividends. Consequently, dividends are almost always higher than on most common stocks. As we go to press yields on REITs were ranging from around 6% to a little over 9%. Some REITs focus on a specific geographical area while others specialize in particular types of property, such as shopping centers, commercial buildings, storage units, or health care facilities. As you know, if you've been reading this column, I often recommend that you check the opinions on individual stocks written by independent analysts in Value Line Investment Survey. This weekly service, available at many public libraries, covers a number of REITs, rating them for both timeliness and financial soundness. BUYandHOLD's Company List includes several REITs. You can go to Research Stocks to learn more.

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