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TheStreet Open House

Income Investors Love These 5 REITs -- and So Should You

BALTIMORE ( Stockpickr) -- If you're an income investor, real estate investment trusts (better known as REITs) probably hold a special place in your heart. After all, this special class of stock is basically purpose-built to generate investment income. That's saying a lot in an environment where rates are effectively zero.

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But with around 220 REITs floating around on public exchanges, knowing which ones to buy and which to ignore can be quite a chore. That's why today we're taking a closer look at five favorite REITs for income investors.

As the name implies, REITs own real estate (or real estate-related assets like mortgages). But don't think of these stocks as a way to get exposure to the real estate sector. Instead, most are better thought of as a pure-play income generation tool. That's largely because of a tax law passed in 1960 gives REITs the ability to skip paying taxes by passing on earnings to investors. The caveat is that they have to distribute 90% of their earnings to their owners. As a result, they typically sport very big dividend yields.

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2013 has been a stagger-start year for REIT investments. By and large, these trusts have failed to match the breakneck pace of the S&P 500. But with relative strength coming back into the sector this summer, that could be about to change.

There are many different flavors of REITs on the market right now; here's a look at five that offer a best-in-class combination of high yields, gain potential, and niche business appeal.

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These REIT names are worth owning in 2013.

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