The first part deals with the components of a dividend yield, where I mentioned that the risk-free rate sets the base for a REIT's dividend yield. In this post, I will focus on this component, as it is a long term driver of REIT yields as a sector.

Brief history of interest rates. Broadly speaking, as REITs trade like junk/high yield bonds, changes in government bond yields generally drive dividend yields. Institutional investors like pension funds, insurance firms, asset management companies and even central banks, tend to perceive REITs relative to government and corporate bond yields, especially since the Global Financial Crisis of 2009. Recall that at the height of the financial crisis, the Federal Reserve brought its policy rate to an unprecedented zero percent. Even with that, lending activity remained depressed and total loans in