NEW YORK ( TheStreet) -- Bullish real estate investment trust investors fishing on the sidelines should be moving closer to landing a big REIT play, especially the 5% dividend species. The REIT sector looks a lot better now after a 10% selloff that has driven up dividend yields and made shares more enticing for income investors.With the average equity REIT dividend around 3.5%, there are plenty of options -- over 134 today -- where a dividend investors can fish. The more juicy REITs, however, can be found in the deeper waters where investors can now find dividend yields of over 5%.
Specialty REITs Digital Realty (DLR - Get Report) and Campus Crest (CCG) are both part of the 5%-plus dividend family. Because REITs must pay out almost all of their taxable income to shareholders, investors have historically looked to REITs for reliable and significant dividends -- typically four times higher than those of other stocks on average. The industry's dividend yields have produced a steady stream of income through a variety of market conditions. Albert Einstein said, "Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it." Maybe that's why I think REITs are like the ninth wonder of the world. The compounding effect for the dividend investor has the ability to turn a small amount of money into a substantial sum, and the longer the compounding effect, the more profits you earn over time.