Digital Realty Trust (NYSE: DLR) is a stock I've liked for a long time. It operates data centers. Giant companies like IBM (NYSE: IBM) and Facebook (Nasdaq: FB) rent shelf space in the company's data centers, which provide security, cooling systems and other technology needed to keep the customers' servers running. The stock yields 3.3%. Mortgage REITs are very popular with investors because of the sky-high yields they provide. Annaly Capital Management (NYSE: NLY) yields nearly 16%, while AGNC Investment Corp. (Nasdaq: AGNC) yields more than 11% despite recently cutting its dividend. In some ways, mortgage REITs are a bargain, trading below their book value (what the company would be worth if it were liquidated) with double-digit yields. But there's a good reason they're so cheap. Mortgage REITs borrow money short term and lend it out long term. With yields so low, it's harder for them to make money. There is also fear that the pandemic is causing people to skip their mortgage payments. So if you're investing in mortgage REITs, be careful and do your homework. There are 157 publicly traded REITs. There are also privately held REITs that are sometimes offered by financial advisors. Run, don't walk, away from those. Most turn out to be terrible investments. They are not liquid, meaning you can't get out of them easily anytime you want, and they are not often transparent. You may not know the value of your investment except at certain times of the year when the REIT issues a report. With a publicly traded REIT, you know the value of your investment at every second and can get in or out anytime you want. So stick with the publicly traded REITs. REITs should be a part of any balanced portfolio. Wealthy Retirement's publisher, The Oxford Club, recommends that 5% of your portfolio be invested in real estate, and REITs are an inexpensive and easy way to accomplish that. And you'll likely generate some additional income along the way. Good investing, Marc P.S. It's a commonly known fact that investing in real estate can be a direct route to a wealthy retirement. But still, the market intimidates many investors. I take the stress out of investing in this rewarding sector for my Oxford Income Letter readers. I find the companies that present the best yields and the lowest risk to help them generate income on a set timeline. I'd like to do the same for you and help you build the wealthy retirement you deserve, on your terms. To learn more, click here. |
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