What Are Real Estate Investment Trusts (REITs)?

Real estate investment trusts (REITs) are companies that own or finance income-producing real estate properties.

REITs are similar to mutual funds because they provide investors stable income streams and capital appreciation. Most of them are associated with shopping malls, hotels, offices, and apartment buildings.

real estate investments And they're one of the fastest-growing classes of dividend stocks on the market...

According to the National Association of Real Estate Investment Trusts (NAREIT), there were 216 REITs in the United States in 2014. That marks a 59% increase from 136 in 2008.

"[2014] was a pretty sensational year for REITs," said Rich Moore, managing director at RBC Capital Markets, in an NAREIT report. "This year, you're going to have a positive year on the fundamentals side, no question about it."

Here's why REITs are such attractive investments...

The Benefits of Real Estate Investment Trusts

Real estate investment trusts boast their own attractive qualities separate from other dividend investments. REIT dividends are reliable because they come from constant streams of rent money paid by the REIT's property tenants.

The IRS also requires real estate investment trusts to annually distribute 90% of their taxable income to shareholders.

This federal policy ranks REITs among the highest dividend-paying investments, with a 4.1% average yield for all REITs. That's higher than both McDonald's Corp. (NYSE: MCD) and Caterpillar Inc. (NYSE: CAT) - two of the top five highest-yielding stocks on the Dow. Those two stocks yield 3.56% and 3.72%, respectively.

And the REIT industry is still growing at a fast pace this year...

Several REIT IPOs have already made huge waves in 2015. InfraREIT Inc.'s (NYSE: HIFR) deal on Jan. 30 raised $460 million, making it the largest REIT IPO since Paramount Group Inc.'s (NYSE: PGRE) $2.3 billion deal last fall. In February, Easterly Government Properties Inc. (NYSE: DEA) and Great Ajax Corp. (NYSE: AJX) raised $180 million and $71 million, respectively.

In 2014, the industry's total market cap was $907.4 billion. That's up 235% since 2009. At this pace, it's well on its way to becoming a $1 trillion industry within the next few years.

And we've found one of the best REITs to invest in now with an 18.4% profit potential in 2015...

The Best REIT to Invest in Today

We recommend American Tower Corp. (NYSE: AMT) for one huge reason - it's going to soar from the mobile phone revolution.

American Tower Corp.

Recent Price: $94.80

Market Cap: $40.27 billion

Institutional Ownership: 96%

Dividend Yield: 1.85%

One-Year Target Estimate: $112.44

Beta: 0.51

According to research done by advertising firm Criteo, about 27% of all e-commerce transactions in the United States occur on mobile devices. Tech research company IDG estimates 2.14 billion mobile device shipments in 2018.

All of that wireless connectivity requires more towers. That's exactly where American Tower comes in.

"This is a company poised to profit from broad changes in the wireless world," explained Money Morning Defense & Tech Specialist Michael A. Robinson. "The move to higher bandwidth for web-surfing smartphones is driving competition among service providers, meaning they all need more towers."

The REIT owns 70,000 wireless and broadcast towers around the world. More than half of the structures are located outside the United States. This gives investors broad - yet conservative - exposure to international markets.

If you have a mobile service plan, there's a big chance you've already benefited from American Tower. Its U.S. tenants include all "Big Four" service companies: AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), Sprint Corp. (NYSE: S), and T-Mobile US Inc. (NYSE: TMUS).

AMT stock is up 4.7% in the last year. The company boasts a $40.3 billion market cap and has a one-year target estimate of $112.44 a share.

On top of that, AMT pays a dividend of $0.44. That gives it an impressive yield of 1.85%.

The Bottom Line: Real estate investment trusts rank among the most unique stocks on the market. They offer massive yields and unbeatable tax benefits, making them a great investment for traders seeking out passive income streams. American Tower Corp. is the best REIT to buy now because it offers signature REIT benefits and growth prospects from the mobile tech revolution.

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