Real Estate Investment Trusts (REITs) are presenting opportunity as some of the largest commercial real estate companies have raised their dividends. Related exchange traded funds (ETFs) are a good way to access this segment of the market.REIT investment and the ETFs that hold them are a good diversification tool for investors as they offer a low correlation to other asset classes, moving in different directions than bonds and other types of stocks. Roger Friedman for The Motley Fool reports that these investments potentially offer a way to capitalize on the economic downturn.[REIT ETFs Quietly Storm The Markets.]
Three companies to watch, according to The Motely Fool, include:
- Anworth Mortgage Asset (NYSE: ANH)
- Chimera Investment (NYSE: CIM)
- Annaly Capital Management (NYSE: NLY)
Overall, the industry for REITs is half a century old this year, and to celebrate, many landlords are giving the gift of larger dividends. A.D. Pruitt for The Wall Street Journal reports the higher payouts reflect the higher rents and better occupancy levels, which are boosting the income pool for dividends. Since the beginning of the year, 37 REITs have raised dividends; seven have cut dividends. This is a turn around for the industry as last year 61 cut or suspended their payouts.[Signs Of Strength In Commercial REIT ETFs.]
Remember that although conditions are looking more fertile for growth, there is a way to go to get back to any highs seen in 2005 or 2006, when dividend increases reached 104 and 100, respectively. However, the outlook is looking much better for the long term.
- SPDR Dow Jones REIT (NYSEArca: RWR)
- First Trust S&P REIT (NYSEArca: FRI)
- iShares FTSE NAREIT Industrial/Office (NYSEArca: FIO)
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.