Hi Friends,
I used to be a fan of REITs (real estate investment trusts) as they produced a steady income stream while the underlying assets also appreciated in value. I generally look at REITs similar to preferred stocks - an alternative to bonds/treasuries/CDs for fixed income exposure.
About 8 years ago, I decided to get out of REITs. Mostly due to the fact that the dividends were not supported by the underlying income (exasperated by a low interest rate environment) and I felt they were just yield traps - plus they are inefficient from a tax perspective as you pay tax on the dividends right away, as opposed to a company whose profits are reinvested and the stock price rises (a dividend drops the price per share).
Here is a chart on the MSCI US REIT index:
REITs have struggled mightily and I am for sure staying away from them in the current environment as rents are going down as people work from home and do more through ecommerce. I also stay away from oil and gas MLPs now a days as well.
What is your outlook on REITs in the near future?
Thanks for coming by,
Brian
