What is a REIT?
REIT stands for Real Estate Investment Trust and is not an asset that most investors will instinctively look to. Dividend investors know the major benefits of investing in REITs, because of the high payment distributions that these assets make, usually on a monthly basis. It’s why in times of market volatility, REITs are often a great way to hedge your portfolio. You can think of investing in REITs like holding ownership in real estate directly in your brokerage account. The rent that REITs collect is mostly paid back to investors as a generous dividend yield. Having that cash flow constantly coming into your account is an incredible way to stay afloat during these times of uncertainty. Here are two of my favorite REITs to consider for your portfolio!
Realty Income Corp
Often seen as one of the top REITs to own in your account, Realty Income Corp (NYSE:O) owns 11,280 different properties across all 50 states as well as international markets like Puerto Rico and even Spain. It is one of the most well diversified real estate portfolios you can invest in. O recently joined the exclusive Dividend Aristocrats club in 2020, which means the REIT has raised its dividend each year for 25 consecutive years. The REIT has paid out 621 consecutive monthly dividends to shareholders, with 98 consecutive quarterly increases. Basically, Realty Income Corp is a cash generating machine and long-time investors can tell you how much their position has compounded over time. If you add one REIT to your portfolio, consider adding Realty Income Corp.
American Tower Corp
American Tower (NYSE:AMT) has been another well performing REIT, which specializes in wireless communication real estate. The REIT holds 221,000 global sites in 25 different countries across six different continents. If you think smart phones and wireless communications are here to stay, then you might want to consider investing in American Tower as a direct way to benefit off this trend. AMT also offers a generous dividend yield of 2.42% although this REIT pays out its distributions on a quarterly basis, rather than monthly like O. AMT’s most recent quarterly dividend was $1.40 per share.
Simon Property Group
Simon Property (NYSE:SPG) is one of the best known retail REITs. It owns hundreds of shopping malls, premium outlet centers, and community and lifestyle centers across North America. SPG pays out one of the higher dividend yields with an annualized yield of 5.86%, which made the latest quarterly dividend $1.70 per share. Simon Property Group also owns well known and established brands like The Mills, Taubman Centers, JCPenney, and has just recently agreed to acquire Kohl’s along with Brookfield. SPG survived the pandemic and now, as the world is opening back up, is positioned to take advantage of a surging return to brick and mortar retail stores. Adding a small position in each of these REITs will provide nice cash flow throughout the year, and help to keep your portfolio afloat with plenty of dry powder to invest in market downturns.
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