In looking at every investment sector over the past twenty years, real estate jumps out as one of the strongest. Even with the growing sense of uncertainty in markets, real estate is likely to have bouts of surging performance that greatly exceed its downturns.
Cash is hard to argue with in any circumstance – but with the possibility of further COVID lockdowns, inflation, and geopolitical instability investors are going to want healthy dividends to weather the (sometimes all too literal, given climate change) storms.
REITs are uniquely poised to dish out that desperately needed income, given that they are legally required to send out 90% or more of their profits to shareholders. They are an arcane corner of the market, so gaining broad exposure through a REIT focused ETF can help mitigate some of the research and work needed to navigate the space.
Here are four REIT ETFs that can investors can use to juice dividends and prepare their portfolios to both survive and thrive in uncertain times:
- The Nuveen Short-Term REIT ETF (NURE) is one of the best possible defenses against rising inflation. Since roughly half of its investments are on properties with short-term leases, it is uniquely positioned to take advantage of rising rents that come with high housing demand and inflation. It is also actively managed, with a tight focus on just 35 companies, making it one of the more nimble REIT ETFs available.
- The ALPS Active REIT ETF (REIT) is another actively managed fund that can be reactive in uncertain economic conditions. It is a low-cost, tax-efficient fund that covers a broad variety of property types, including apartments and industrial properties. Their biggest holding is currently with data center-focused Equinix, at 8.9%.
- The JP Morgan BetaBuilders MSCI US REIT ETF (BBRE) is a passively managed equity REIT fund that focuses mostly on apartments, making it another great option as an inflation hedge. It is up 39.99% in the past year and is a solid dividend growth option in the mid- to long-term. Though investors sacrifice some of that reactivity that an actively managed fund provides, as a passive fund, BBRE features an expense ratio of only 0.11%, which is significantly lower than most REIT ETFs.
- The VanEck Vectors Mortgage REIT Income ETF (MORT) is a dividend superstar, with a yield of 7.02%. MORT is focused mostly on mortgage REITs, which provide liquidity for both residential and commercial properties. They profit primarily from their net interest margin and the spread between interest income and funding costs. In some ways they behave more like a bank, and though risky they have tremendous income potential. MORT is an obvious choice for investors who need to enhance their current returns.
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