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"To say that a different way, if you own REITs that are generating a dividend of 8%, and you are spending the entire dividend, then you probably are falling behind inflation, and could eventually run out of money."--rkmacdonald
Very true.

What I look for, in my initial screening, are REITs on the Realty Stock Review "Income Portfolio" list that have (1) a fairly generous dividend (currently around 8%); (2) a payout ratio that is not excessive; and (3) a total expected return that is close to double that of the dividend. Getting all dividend and almost no capital appreciation is not good. I also have some "blue chip" REITs with somewhat lower dividends but better growth prospects.

The nice thing about these sizeable dividends is that portions of them can be treated like long term capital gains and you don't have to sell stock to obtain extra income above and beyond pensions, Social Security, etc.
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