REIT Calculator
A REIT calculator estimates the total return on a Real Estate Investment Trust investment, combining three moving parts: the current dividend yield, annual dividend growth, and share price appreciation. Choose whether to reinvest dividends (DRIP) or take them as cash, apply your dividend tax rate, and see the projected end value, cumulative dividends, and annualized return.
Why REITs need a different calculator
REITs are required by law to distribute at least 90% of taxable income as dividends, which makes them income-heavy investments. A plain stock return calculator treats most growth as price appreciation, but a REIT's total return comes disproportionately from dividends. Ignoring the dividend stream under-counts REIT performance by a wide margin. Historically, dividends have contributed roughly 70% of equity REIT total returns over long periods, with price appreciation contributing the rest.
What the calculator models
This REIT calculator runs a year-by-year simulation. Starting from your initial investment, each year: (1) the REIT pays a dividend at the current yield, (2) if DRIP is on, dividends are reinvested in more shares, (3) the share price appreciates by the annual rate you set, and (4) the dividend per share grows by the dividend growth rate. The output includes end value, total dividends paid, price appreciation gain, total return, and compound annual growth rate (CAGR).
A concrete example
$25,000 invested in a REIT yielding 4.5% with 4% dividend growth and 3% price appreciation over 15 years with dividends reinvested: end value is roughly $70,500, total dividends paid are about $30,000, and CAGR is about 7.2%. Taking dividends as cash instead yields about $48,000 in share value plus $30,000 in cash received, for a similar total dollars but very different after-tax experience.
Equity REITs vs mortgage REITs
Equity REITs own physical property (apartments, warehouses, data centers, cell towers) and earn from rent. Yields typically 3-5%, dividend growth 3-6%, long-run total return 9-11% annually. Mortgage REITs (mREITs) own real estate debt and earn the spread between short-term borrowing and long-term mortgage yields. Yields are much higher (8-12%) but dividend cuts and price volatility are also higher. Adjust the inputs to match the type of REIT you are modeling.
REIT dividend tax treatment
Most REIT dividends are ordinary dividends taxed at your marginal income tax rate, not the preferential qualified dividend rate. However, the 2017 Tax Cuts and Jobs Act introduced a Section 199A deduction allowing individuals to deduct 20% of REIT dividend income (through 2025 under current law). A taxpayer in the 24% bracket effectively pays 19.2% on REIT dividends after the QBI deduction. Holding REITs in a Roth IRA or traditional IRA avoids annual dividend taxation entirely, which is often the preferred structure for REIT investors.
FFO and AFFO
When analyzing a REIT directly, metrics like Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) matter more than standard earnings, because real estate depreciation distorts GAAP net income. A sustainable payout ratio for a REIT is 70-90% of AFFO, versus 40-60% of earnings for a typical industrial stock. Use this calculator for portfolio-level projections and dedicated REIT fundamentals for single-name analysis.