Real estate investment trusts (REITs) are wildly popular with investors seeking a passive income. In the UK, these investment trusts currently offer an average dividend yield of 5.3% — roughly 1.7 times the FTSE 100 average — with some high-income names offering yields of 7% or more.
Dividends are central to investor returns, with rules stating at least 90% of yearly rental profits be returned to shareholders. But that’s not the only thing that sets them apart. They often have tenants tied down to long-term contracts, providing excellent earnings visibility.
Many also have a huge and diverse tenant base, which reduces damage if one or two clients run into trouble. Over time, rent collection and property occupancy remain robust.
In the UK, there are more than 40 REITs that ISA investors can choose from. Here are three to consider — a £20,000 ISA invested equally across could deliver £1,300 in dividends in just one year.
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Tritax Big Box
Tritax Big Box (LSE:BBOX) operates a portfolio of more than 100 distribution centres across Britain, offering excellent diversification. A large number of these are let to major blue chip companies, too, providing extra reassurance to investors. These include Amazon, Tesco and Rolls-Royce.
The logistics market has significant growth potential following years of underinvestment, and driven by trends like changing supply chain management and the rise of e-commerce. But that’s not the only reason I’m excited, as Tritax is also branching out into data centres to capitalise on the AI boom.
Rising interest rates could hit earnings in the near term. But the outlook remains strong over the longer term, helped by Tritax’s huge development pipeline. The dividend yield here is 5.5% for 2026.
AEW UK
AEW UK‘s forward dividend yield is even higher, at 8.1%. That’s more than double the FTSE 100 average.
This trust operates a more diversified portfolio, with 34 properties including factories, office blocks, and gyms. It also has a large retail footprint, which creates opportunities as well as problems. Its high street stores and shopping centres are in danger from online retail, but its retail parks should prove more resilient as consumer habits evolve.
AEW’s kept the dividend locked at 8p for the last nine years. Another one is predicted for this financial period (to March 2027), creating that enormous 8%+ yield.
Target Healthcare
Target Healthcare is a REIT I hold in my own portfolio. It’s focused on residential care homes, which is one of the most defensive sectors out there. So I can expect a steady stream of passive income whatever happens to the broader economy.
In total, this one operates 93 care homes across the country. It’s an industry coming under pressure due to skill shortages in the nursing sector. But it’s also one with a significant growth opportunity — by around 2050, the number of over-85s in the UK is tipped to double to more than 3.3m.
Target Healthcare boasts a healthy 6% dividend yield for this financial year (to June 2026).
