February 19, 2018

5 REITs With Yields Of Up to 9.9% To Sell Immediately



Real estate investment trusts (REITs) are one of the market’s best sources of high yield. But they can also be one of its searing sources of heartburn.

For your sanity’s sake, and for the good of your retirement savings, avoid the five high-yielding REITs I’m going to warn you about today. Then reinvest that money into the sure-fire 8% yielders I’ll highlight after that.

REITs are set up, by design, to be income powerhouses. That’s the deal. They get to evade Uncle Sam, and in return, they have to funnel the lion’s share of their profits to shareholders. But a mandate only goes so far – if a REIT has less cash to redistribute, simple math says you and I suffer.

My latest warning tale comes from up north, where Boardwalk REIT – an apartment owner across Alberta, Ontario and Quebec, among other provinces – pulled the rug out from underneath its shareholders.

Boardwalk was a safe bet for some time, making more than 150 consecutive monthly distributions since its 2004 IPO. However, the company’s profitability suffered amid a nearly two-year economic downturn in Alberta, and its funds from operations (FFO) dipped so far that they weren’t keeping up with the dividend payments.

Investors who had been paying attention were already heading for the exits.

But buy-and-holders thinking Boardwalk was safe had their illusion dashed in November 2017 by a 56% cut to that monthly dividend.




1 comment:

  1. I've been a long-time holder of Annaly (NLY). I've held it for so long that it's become one of my major passive income contributors.

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    ReplyDelete