Distribution Yield
Distribution yield is the annual income a DST or REIT pays investors, expressed as a percentage of the amount invested, a key measure of cash flow.
Definition
Distribution yield is the annual cash an investment pays out, divided by the price or amount invested, expressed as a percentage. For a DST or REIT, if you invest $100,000 and receive $5,000 a year in distributions, the distribution yield is 5%.
It is the headline income number most 1031 and DST investors focus on, since many are trading an actively managed rental for passive cash flow. But yield alone can mislead. Distributions may include a return of capital rather than pure profit, and a high yield can signal higher risk or a property drawing down reserves.
Distribution yield differs from total return, which also includes appreciation realized when the property sells. A DST might pay a 4.5% yield during the hold and deliver additional gain at sale. Investors should look at whether distributions are covered by actual operating income, not just the advertised rate.
Key points
- Annual distributions divided by amount invested
- The main cash-flow metric for DSTs and REITs
- May include return of capital, not just profit
- Different from total return, which adds appreciation
Related terms
Jerry Baker founded Baker 1031 Investments to help exchange investors move from active property ownership into passive, institutional-quality real estate through DST, 721 exchange, mineral royalty, and Opportunity Zone strategies. He holds the FINRA Series 22 and Series 63 registrations and the Securities Industry Essentials (SIE) qualification. Read full bio →
Reviewed by the Aurora Securities, Inc. compliance team — Aurora Securities, Inc., member FINRA/SIPC. Last reviewed July 2026. Securities are offered through Aurora Securities, Inc.; Baker 1031 Investments, LLC is independent of Aurora Securities, Inc.
This glossary entry is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. Definitions are general and may not reflect your specific circumstances — consult your own CPA and attorney. Past performance does not guarantee future results.