Real estate investment trusts and related exchange traded funds were pressured during the Fed “tapering” scare. Nevertheless, a diversified REIT fund helps long-term investors generate stable yields.
Instead of trying to time the exact bottom in a REIT stock, a person can build up a watch list or hold a diversified REIT ETF portfolio that offers a great option for individual investors who are looking for a “one stop shop,” writes Charles Sizemore for Forbes.
For example, Sizemore points out a handful of broad large-cap REIT ETFs, including the Vanguard REIT ETF (NYSEArca: VNQ), which has a 3.37% dividend yield and a 0.10% expense ratio, the SPDR Dow Jones REIT (NYSEArca: RWR), which has a 2.84% dividend yield and a 0.25% expense ratio, the iShares Cohen & Steers Realty Majors (NYSEArca: ICF), which has a 2.86% dividend yield and a 0.35% expense ratio, and the iShares Dow Jones US Real Estate ETF (NYSEArca: IYR), which has a 3.52% dividend yield and a 0.47% expense ratio. [ETF Chart of the Day: Real Estate Investment Trusts (REITs)]
The four ETFs follow a slightly different indices to track the REIT sector, but their top holdings are relatively the same, with names like Simon Property Group, which is the largest holding in all four funds, HCP Inc., Public Storage, Vornado and Equity Residential.
Potential investors should be aware that some REITs, notably Vornado, have shifted away from pure rent collectors to “deal making” growth through property speculation.