A real estate investment trust (REIT) usually follows one of three investment approaches: it invests in equity, mortgage loans, or a combination of the two. The vast majority (more than 90 percent) of REITs are equity REITs, and only about 5 percent are mortgage-based. An even smaller number are hybrids. Beyond these basic strategies, a REIT also may focus geographically or by the type of real estate it invests in.

Some of the nation's 300-plus REITs invest nationwide. Others limit their investments to a particular region, or even a single urban center, such as the greater Chicago area.

More than one fourth of REITs invest in industrial and office buildings, according to the National Association of Real Estate Investment Trusts. About one fifth invest in retail enterprises, including shopping centers and factory outlet malls. Lower numbers of REITs also invest in many other different types of real estate—for example, residential developments, hotels and resorts, self-storage businesses, and healthcare facilities such as hospitals, nursing homes, rehabilitation centers, and assisted living centers. Some REITs also invest in projects that improve community life, such as renovating Main Streets and converting historic, rundown buildings to new uses.

As you can imagine, the holdings of a REIT will have a major impact on the dividends it pays its shareholders, as well as the value of the shares on the secondary market.