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Real estate investment trusts (REITs) can be an excellent way to target a long and lasting passive income. Dividends aren’t guaranteed, but they have qualities than can make them better income choices than most other UK shares.
Under REIT rules, companies must pay at least 90% of annual rental earnings out in dividends. This still leaves payouts sensitive to profits performance, but it also provides a higher level of income visibility for investors than most other stocks.
What’s more, with diversified tenant bases and clients locked onto long-term contracts, these businesses enjoy relatively stable cash flows they can use to pay dividends.
So what are the hottest REITs to buy right now. In my opinion, three of the hottest to consider are:
- Schroder European Real Estate Investment Trust
- Alternative Income REIT
- Regional REIT (LSE:RGL)
Each of these property powerhouses offers a forward dividend yield of at least 10%. Want to know what makes them true dividend heroes?
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Euro giant
Schroder European Real Estate Investment Trust holds a top-class portfolio of properties in continental hotspots. We’re talking about highly desirable cities with strong economies and infrastructure. Think Paris, Berlin, and Hamburg, to name a few of its locations.
It’s a winning strategy that leads to reliable rent collection and strong occupancy (portfolio occupancy was 97%, latest financials show). The trust’s exposure to different sectors like logistics, office, retail, and data centres also gives it strength.
The forward dividend yield here is 8.1%. I think it’s a top trust to consider, even though adverse currency movements could take a bite out of earnings.
Another diversified REIT
Like the Schroder trust, Alternative Income REIT takes a diversified approach to the property market. If anything, things are even more wild and wonderful — they range from hospitals and petrol stations, through to hotels, gyms, and thermal power plants.
Its rent collection is even higher, at 100%. And its tenants are locked down on ultra-long contracts, providing protection from (if not totally eliminating) cyclical pressures on rent collection. The weighted average unexpired lease term for its 23 tenants sits at 17 years.
With more than 92% of rental income linked to inflation, too, Alternative Income is in great shape to grow shareholder payouts. For 2026, the dividend yield is a brilliant 8.5%.
Double-digit yield
At 10%, Regional REIT is today the highest-yielding property trust on the London stock market. It carries greater risk than the other contenders we’ve looked at, reflecting its narrow exposure to the UK and broader weakness in the office market in which it specialises.
This has caused its share price to slump over the past year (down 10%). But is the bad news now baked into the trust’s share price? I think it might be. As well as having that enormous yield, Regional REIT trades at a 51% discount to its net asset value (NAV).
To my mind, it’s a top recovery share to consider. The REIT retains a high-quality portfolio, and is selling non-core assets to boost occupancy and repair the balance sheet. As for dividends, this year’s predicted payout is covered more than twice over by expected earnings, providing a wide margin of error.
