Some REITs have what it takes to outperform in this sort of environment
Real estate investment trusts (REITs) have really taken it
on the chin lately. That’s all due to Federal Reserve’s meddling. The reasoning
is this: REITs — through their tax structures — are designed to push much of
their net income back to shareholders. So, as a result, many REITs feature high
dividends. And as a high-yielding security, investors tend to abandon them
during periods of rising rates. After all, as the Fed raises interest rates,
you can score higher yields on “safer” bonds.
It turns out that reasoning is false, however.
According to Nareit, REITs actually outperform during
periods of tightening. And in fact,
during the last cycle, REITs managed to gain more than 80%. This is because the
rates of dividend and rent growth are often much greater than changes in
interest rates. And with that fact in tow, investors are being given a gift to
load up on REITs for the long haul.
Here are five top-notch REITs to buy today despite rising
rates:
No comments:
Post a Comment