Real estate stocks have become a popular income investment
vehicle. Most operate as real estate investment trusts (REITs). These REITs are
supposed to pay at least 90% of their income in the form of dividends. In
exchange, REIT do not have to pay income tax on the net income generated from
their properties.
For this reason, REITs tend to pay higher dividends than
most stocks. The average S&P 500 stock now generates a dividend yield of
1.9%. The average equity (meaning non-mortgage) REIT currently yields an
average 3.9% return.
However, some pay a much higher dividend and can sustain
that payout for several years. This occurs even as lifestyle changes and
technology affect the demand for and use of properties. In our dynamic economy,
these five real estate stocks have maintained strong, steady dividends amid the
changes, Consequently, I believe they are good stocks to buy.
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