Dividends have long been one of the pillars of the thesis for real estate and REIT ETF investment. While the sector is grappling with challenges dealt by rising interest rates this year, payout growth among publicly traded real estate names remains sturdy.
That’s good news for a variety of exchange traded funds with allocations to real estate investment trusts (REITs). Investors should not gloss over the Goldman Sachs Future Real Estate and Infrastructure Equity ETF (GREI) in the income conversation.
While GREI is positioned as a growthier option for real estate exposure, it offers investors more than adequate income potency due to the pairing of real estate and infrastructure under one roof. That’s a pertinent trait at a time of rising real estate payouts.
“Eight U.S.-based publicly traded equity real estate investment trusts announced increases to their regular dividend payments in September,” according to S&P Global Market Intelligence.
Data confirm some GREI components are getting in on the dividend-hiking action, which is meaningful because many of the ETF’s real estate components have better growth profiles relative to the sector at large and are newer dividend growers.
“Four additional REITs announced dividend hikes during the month, including cannabis-oriented Innovative Industrial Properties Inc., communications REIT American Tower Corp., single-tenant retail REIT Realty Income Corp., and diversified REIT W. P. Carey Inc.,” adds S&P Global.
American Tower (NYSE: AMT), which is levered to the 5G transition and other technological advancements, is GREI’s fourth-largest holding at a weight of 4%, as of October 19.
“The most recent dividend hikes have brought the year-to-date total to 83 for U.S. REITs, or about 51.6% of the entire U.S. REIT industry,” noted S&P Global. “On a sector basis, 14 residential REITs in the U.S. have announced higher dividends year-to-date, or about 77.8% of all residential REITs.”
Obviously, the broader dividend growth in the real estate sector is relevant to investors evaluating GREI, but so is the point regarding payout growth at the industry level. GREI is actively managed so the fund’s managers can seek attractive dividend growth opportunities while avoiding real estate companies in ailing industries that could be dividend offenders.
Before September, several of GREI’s 47 member firms were among the REIT dividend raisers through the first eight months of the year, confirming the Goldman Sachs ETF has widespread leverage to the theme of growing payouts in the sector.
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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.