The focus with most REITs may be on their income potential, but with these seven, appreciation potential is the main appeal
REITs, or real estate investment trusts, are a popular
vehicle among income-focused investors. Why? By buying and leasing out
commercial real estate, these entities pay zero income taxes. Just as long as
they distribute 90% of their earnings to shareholders in the form of dividends.
In turn, that usually means high yields for REIT stocks.
This makes it a great investment, for those looking to generate portfolio
income. But while income may be the main focus, the potential for long-term
appreciation is in focus as well. Due to their ownership of hard assets (i.e.
real estate), they can serve as a great inflation hedge.
However, among the real estate investment trusts offering
high yields and solid overall returns are a few that could produce outsized
returns. For many names, several catalysts could drive this. Assets sales, for
one, may help some REIT stocks surge this year. Improved operations, or organic
growth, could drive a spike as well. For some of them, the market realizing
there’s a big gap between trading price and underlying value could help them
rocket higher over the next twelve months.
So, which real estate investment trusts could become big
winners for your portfolio? These seven, a mix of apartment, office, retail and
specialty REITs, have ample room to run
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