How to Pick REITs with 160% Upside as Rates Rise

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Let’s assume that higher long-term rates (3%+) are here to stay. Can REITs (real estate investment trusts) and high rates co-exist? Or must there be just one winner in this suddenly one-sided tug of war?

After all, as the 10-year Treasury’s yield has rallied, REITs have suspiciously suffered:

REITs and Rates: Oil and Water?

And the headline arguments against REITs during rising rate periods seem to make sense:

  • REITs need cheap money to grow, and
  • When risk-free assets pay more, income investors will buy them instead of REITs.

These knocks may apply to low-yielding shares, especially static payers, but they historically haven’t applied to firms (REIT or otherwise) that have been able to grow their payouts meaningfully as rates have risen.…
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Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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