REIT Income

Moderate Income

Real estate generates income and appreciates with inflation. REITs offer landlord economics without the tenants calling at midnight. Diversified across property types for resilience.

4
ETFs
3.5%
Aggregate Yield
$31.2B
Wtd Avg AUM

Holdings

Symbol Name Weight Price 1D 3M YTD Yield AUM
VNQ VNQ 40% ... ... ... ... — —
VNQI VNQI 20% ... ... ... ... — —
IYR iShares U.S. Real Estate ETF 20% $99.03 ... ... ... 2.3% $4.3B
BND Vanguard Total Bond Market 20% $73.64 ... ... ... 3.3% $151.6B

Investment Thesis

REITs (Real Estate Investment Trusts) are required by law to distribute at least 90% of their taxable income to shareholders, making them one of the most reliable income vehicles available. The underlying properties generate cash from rents that tend to rise with inflation — most commercial leases have built-in escalators tied to CPI or fixed annual increases. This portfolio diversifies across property types through VNQ (US REITs across all sectors), VNQI (international real estate for global diversification), and IYR (a complementary US REIT allocation). BND provides bond income and reduces the portfolio's overall volatility. Real estate has historically been a powerful diversifier because property cycles don't perfectly correlate with stock market cycles. The ~3.5% aggregate yield significantly exceeds the S&P 500's dividend yield.

Portfolio Construction

VNQ VNQ
40%
Diversified US REITs — data centers (Equinix, Digital Realty), cell towers (American Tower, Crown Castle), industrial (Prologis), and residential. The most diversified REIT ETF available.
VNQI VNQI
20%
International REITs for global diversification — European, Asian, and Australian real estate markets often have different cycles than the US, providing true diversification.
IYR iShares U.S. Real Estate ETF
20%
US real estate sector ETF — similar to VNQ but with slightly different weighting, providing additional exposure to the strongest performing property sectors.
Yield: 2.3% AUM: $4.3B
BND Vanguard Total Bond Market
20%
Bond income to reduce REIT volatility — REITs can be as volatile as stocks. Adding total bond exposure smooths returns and provides income from a different source.
Yield: 3.3% AUM: $151.6B

Key Considerations

  • REITs are highly sensitive to interest rates — rising rates increase borrowing costs and make bond yields more competitive
  • Office REITs face structural headwinds from work-from-home trends
  • Real estate is illiquid at the asset level, though REIT shares trade freely
  • Economic downturns can lead to tenant defaults, rent concessions, and falling property values
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