As stated above, REITs must distribute at least 90% of their taxable earnings as dividends to shareholders yearly. To those who are unfamiliar with REITs, this may seem like a large sum. However, the payment an investor receives is determined by the payout ratio. For instance, suppose a REIT has a payout ratio of 25%. This means for every dollar of net earnings, shareholders will receive 25% of that dollar through dividends.