Category Archives: REIT ETF

Open Letter To ETF Industry: Create A Better Dividend Growth Product – Seeking Alpha

Open Letter To ETF Industry: Create A Better Dividend Growth Product – Seeking Alpha:

Dear ETF Industry,

There is a vibrant market for an ETF or mutual fund that implements a sensible dividend growth strategy. With all due respect, the myriad “dividend” products that you have created until now don’t cut it. I spent some time this past spring looking for good dividend growth ETFs (I, II, III), but I finally gave up in frustration.

I am happy enough being an individual dividend growth investor myself, and I don’t personally need a good dividend growth ETF at the moment. But many other investors could use such a product. And some day I will die. I would like to be able to tell my wife, who is not very interested in investing, to “just put it into XXX.” But a suitable XXX does not exist.

Investing In Real Estate Investment Trusts – Buy Like Buffett

Investing In Real Estate Investment Trusts – Buy Like Buffett

Investing In Real Estate Investment Trusts

All investors are looking for increased investment yields in a low interest rate environment. You may not be aware of this but you can generate some great yields by investing in one particular type of stock. This type of stock is known as REITs. The term REIT stands for real estate investment trusts. These are companies whose primary operations stem from investing in real estate. This can be in the form of owning commercial properties or buying residential real estate mortgages.

Why REITs are Attractive

Here’s why I think real estate investment trusts are attractive investments right now.

Rebound in the housing market

Many of the homebuilders and housing related stocks have released earnings that have been subpar at best over the past few years. Sales, earnings, and profitability are all down. The sector is still in the doldrums and many investors have abandoned it. Despite all of the negative news companies are expecting a rebound in the sector. Most CEOs are very optimistic about the residential real estate sector over the long term.
While the commercial real estate sector did not drop off the cliff like the residential sector (at least not yet!) companies are seeing increased demand in the sector. Retail and commercial stores are hiring again. Occupancy rates are rising at malls and shopping centers as well. Many REITs have been able to obtain favorable financing that has allowed them to reduce and eliminate their long term debt. A robust economy is great for the commercial real estate market.

Rising dividend yields

Some of the best yields in the market can be found in the real estate sector. You can find many REITs with yields of 3.5% and upwards. There are a number of quality companies paying investors yields in the 5% range. The only other two industries offering comparable yields are in the utilities and telecommunication industries.
As the economy continues to improve rising earnings will lead to rising dividend payments for REIT shareholders. Since REITs are required to pay out 90% of their earnings to shareholders in the form of distributions they are great investments for dividend investors. At a time when solid dividend yields are hard to find the real estate sector keeps serving them up.

Low stock prices

Timing is one of the most important factors in any investing decision. A good investment is one in which all of the fundamentals line up properly. It’s when the right company is selling at the right price at the right time. If you purchase the stock of a good company at the wrong price you have made a bad investment.
Many real estate stocks are a bargain right now and are trading at discounted levels. While other sectors look overvalued there are many REITs that look undervalued right now. These low prices have led to some rather impressive yields. You can find some companies trading at book value and sporting P/E ratios lower than their historical averages.
Now is a great time to get long positions in real estate investment trusts. While I still would not buy the stocks of homebuilders I would look to acquire REITs due to their generous yields.

2011 stock picks: REIT ETF’s � Intelligent Speculator

2011 stock picks: REIT ETF’s � Intelligent Speculator

So you have been building up a passive income portfolio and are at a point where you want to add more diversification to what you have? REIT’s would certainly be a great addition but they are often difficult to choose from without spending a lot of time and while some of us want to spend the time to choose the best ones, many others want an easier solution. Of course, that is where ETF’s come in.We wrote about REIT ETF’s briefly last year and received a lot of positive feedback because of the lack of information about the options.
REIT ETF’s are not new but they are certainly gaining steam and right now,Vanguard’s VNQ looks like a very solid winner. It has a very low 0.13% annual fee which is by far the best you will find in the sector and pays a very reasonable 3.42% dividend yield. And things are changing fast. Last year, VNQ was the category leader but had less than $5 billion in assets under management. These days, VNQ counts on over $15 billion and has distanced itself from rivals. It has investments in 104 US REIT’s although over 40% of those assets are invested into their top 10 holdings.

Real Estate Outlook

There remains some degree of risk involved in the real estate market as many investors continue to worry about a double dip in prices and REIT ETF’s are certainly not for everyone. If you do not have much assets besides your house, you might already have a big enough exposure to the real estate market (although you would admit that exposure is not very diversified) but as your portfolio grows, gaining more exposure is probably a good thing as it will make your passive income portfolio more solid, steady and reliable in the long term.
My first recommendation would be to take a look at the 20 things that I consider when selecting ETF’s, but if you want to cut straight to the case, I would consider the two main choices here to be VNQ and RWX (an internationally diversified real estate ETF), but here are most of the options that you have:
Ticker Name Market Cap Price Fees 1Y Return Dividend Yield
VNQ Vanguard REIT ETF $7,487,048,000.00 $55.37 0.12 26.417 3.42
IYR iShares Dow Jones US Real Estate Index Fund $3,083,396,000.00 $55.96 0.47 24.275 3.52
RWR SPDR Dow Jones REIT ETF $1,368,794,000.00 $61.02 0.25 25.91 2.94
RWX SPDR Dow Jones International Real Estate ETF $1,437,894,000.00 $38.93 0.6 21.429 8.69
URE ProShares Ultra Real Estate $536,793,300.00 $50.62 0.95 42.814 0.77
SRS ProShares UltraShort Real Estate $241,879,900.00 $18.14 0.95 -49.889 0
IFGL iShares FTSE EPRA/NAREIT Developed Real Estate ex-US Index Fund $378,322,000.00 $31.01 0.48 15.533 6.24
DRN Direxion Daily Real Estate Bull 3x Shares $178,983,000.00 $56.82 0.96 55.568 1.88
RWO SPDR Dow Jones Global Real Estate ETF $163,108,000.00 $37.07 0.51 23.672 7.08
DRW WisdomTree International Real Estate Fund $118,814,500.00 $28.63 0.58 17.51 9.29
DRV Direxion Daily Real Estate Bear 3x Shares $55,288,740.00 $18.01 0.95 -70.396 0
FRI First Trust S&P REIT Index Fund $71,052,530.00 $14.65 0.5 25.456 2.04
REM iShares FTSE NAREIT Mortgage Plus Capped Index Fund $102,114,500.00 $15.59 0.48 16.817 9.1
TAO Guggenheim China Real Estate ETF $65,004,400.00 $19.94 0.65 11.714 0.77
REZ iShares FTSE NAREIT Residential Plus Capped Index Fund $70,902,000.00 $39.39 0.48 30.302 3.03
FTY iShares FTSE NAREIT Real Estate 50 Index Fund $50,580,000.00 $33.72 0.48 24.455 3.56
FFR First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund $56,032,070.00 $35.02 0.6 18.518 3.87
IFAS iShares FTSE EPRA/NAREIT Developed Asia Index Fund $25,488,000.00 $31.86 0.48 17.218 5.99
PSR PowerShares Active U.S. Real Estate Fund $16,033,500.00 $45.81 0.8 25.703 2.11
RTL iShares FTSE NAREIT Retail Capped Index Fund $14,065,000.00 $28.13 0.48 35.17 2.91
FIO iShares FTSE NAREIT Industrial/Office Capped Index Fund $9,327,499.00 $26.65 0.48 13.856 3.22
IFEU iShares FTSE EPRA/NAREIT Developed Europe Index Fund $8,989,500.00 $29.97 0.48 8.649 4.09
IFNA iShares FTSE EPRA/NAREIT North America Index Fund $10,000,000.00 $40.00 0.48 23.943 2.73
REK ProShares Short Real Estate $19,945,040.00 $39.89 0.95 N/A 0
WREI Wilshire US REIT ETF $9,100,620.00 $30.34 0.32 N/A 0
VNQI Vanguard Global ex-U.S. Real Estate ETF $65,847,700.00 $50.60 0.35 N/A 0.88

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