Real Estate ETFs for Dividends

December 6th at 12:44pm by Paul Weisbruch, Street One Financial

A sector fund that was put in the penalty box only a few weeks ago was XLU (SPDR Utilities), apparently by institutional holders whom were concerned about potential upcoming changes in regards to dividend tax treatment in this post U.S. elections environment.

In similar technical price activity, real estate investment trusts (REITs) were largely affected by the same “crash and burn” that rippled through the underlying stocks in these sectors, only to rip higher in the past several sessions on what looks like a reversal in sentiment, if not just valuation appeal and thirst for yield.

One such fund in the REIT space that stands out is REM (iShares FTSE NAREIT Mortgage REIT), which staggered from as high as $14.85 to as low as $12.85 inside of ten trading sessions in November (amid heavy put buying in REM options that do not trade frequently). [Mortgage REIT ETFs Fighting the Fed]

Since the rapid sell-off not only affecting REM but REITs, Utilities, some MLPs, and other segments of the equity market that are traditional “yield” paying stocks abruptly ended, REM has bounced back above its 200 day MA and now faces overhead resistance at its 50 day moving average ($14.43).

The fact is the fund as current levels boasts a 11.55% yield and this was likely not lost on “value” investors whom may have been fortunate enough to scoop up shares in the $12-$13 level during the last abrupt sell-off. It is also worth mentioning that year to date REM has reeled in more than $640 million in net asset inflows.

Other funds in the broad REITs space that may see accelerated activity given the underlying volatility and apparently contrasting market sentiments out there among institutional participants include IYR (iShares DJ U.S. REIT), VNQ
(Vanguard REIT), ICF (iShares Cohen & Steers Realty Majors), RWR (SPDR DJ REIT), FRI (First Trust S&P REIT), SCHH (Schwab U.S. REIT), REZ (iShares FTSE NAREIT Residential), MORT (Market Vectors Mortgage REIT Income), KBWY (PowerShares KBW Premium Yield Equity REIT), RETL (iShares FTSE NAREIT Retail), IFNA (iShares FTSE EPRA/NAREIT North America), WREI (Guggenheim Wilshire U.S. REIT), PSR (PowerShares Active U.S. Real Estate), ROOF (IndexIQ U.S. Real Estate Small Cap), and FNIO (iShares FTSE NAREIT Industrial /Office).

iShares FTSE NAREIT Mortgage REIT

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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