Co-produced by Austin Rogers,

Real Estate Investment Trusts (VNQ, “REITs”) are often viewed as “bond alternatives” due to their relatively high dividend yields. REITs are required to pay out at least 90% of their taxable income (not equal to their cash flow) as dividends, making them a preferred investment for passive income seekers.

REITs Tie up
Type of asset Equity capital Debts
Priority in the capital stack Low High
yield 2.5% to >10% 6% to 7%
Income growth? Yes NO
Inflation protection? Yes NO
Upside sources Lower interest rates, rising rents, rising asset prices Lower interest rates

click to enlarge

Source : seekingalpha.com

Leave a Reply

Your email address will not be published. Required fields are marked *