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Is this a decent time to get into REITs since they tend to have high dividends? What are the downsides for REITs -- I know they've been down all year, but it seems like real estate is doing well overall -- as homebuilder stocks are up overall.
Are there REITs you'd consider buying right now?
Just started looking at this sector, as I was wondering whether there was any way for me to invest a bit of money into North Dakota -- and I found IRET -- a REIT based in Minot, ND which is involved with development in ND and 8 other states in the upper Midwest. I'm not totally sold on that one bc you keep hearing that with oil prices falling, North Dakota's development is done -- though on the other hand you hear that construction is still going gangbusters as developers already had permits for airports, hotels, apartments etc. and started building before oil prices dropped so now they will finish those projects; though I wonder if Minot and Williston will now be over developed.
Anyway -- are there "bigger" REITs (i.e. not specific to one geography) that you'd consider now or would you stay away from all real estate?
I own IRET. They are currently reorienting their portfolio of properties from a mix of office and apartments to all apartments. They may have to issue more stock to finance the move, which will dilute the stock value.
REIT stock prices have come down a bit because of rumors of the Fed's increasing interest rates. REIT prices could fall farther depending on what the Fed does. Do your own research and check the website below for current REIT yields.
Someone posted here a while back about healthcare REITs. I might start looking into those as I have a small amount of cash to invest and healthcare seems to have good growth potential (with the Boomers aging, the natural expansion of the health care industry because of that, and the popularity of retirement communities). I don't know much about them though, so I am still in the "research" stage. So far I've only looked into HCN and HCP.
That was me that's a big fan of the Healthcare REIT's as a long term investment. The Baby Boomer population is getting to retirement age now, and those REIT's that operate long term care, skilled nursing, etc are going to be more likely to see consistent growth for the next 20-30 yrs I believe.
A few in this sector to follow: HCP, HCN, VTR, OHI. Those are the big 4 in my estimation. LTC and SBRA are also worth a look.
Another one off REIT I like is ACC. They own and operate very near campus housing at major state universities primarily. There are really only two other players in that sector that are public (CCG and EDR) and neither is of the calibre of ACC.
For general Retail REIT's, Realty Income Corp (O) is sort of the industry standard, yields ~5% and pays a monthly dividend.
I wouldn't touch a mortgage REIT (like NLY or CYS) with a ten foot pole... But that's just my opinion, some love the giant yields of mREIT's
Correction: REIT stocks are down as a whole year to date. But they probably are a decent value, although not necessarily better than stock market as a whole. The folks at Morningstar say they're about 8% undervalued as of 9/11/15. The stock market as a whole is also about 8% undervalued.
I don't venture into individual stocks. I think Vanguard REIT Index is a good fund. VGSLX can be had for $10K. VGSIX is slightly more expensive and can be had for 3K.
Dividends from REITs are nice but the asset class as a whole can be pretty volatile, so that's something to be aware of.
There are two kinds, mortgage and property REIT's.
The folks at Morningstar agree with you. They rate it 4 stars out of 5. I think they said its future growth prospects aren't as good, but it's still a decent bargain at the current price.
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