Dividends Premium REITs: December 2024

REITs Weaken But Prospects are Strong Heading into 2025

Dear Dividends Premium Member

Happy holidays and welcome to the December edition of Dividends Premium REITs. This month, I highlight the key factors behind REITs’ 2024 performance and what’s ahead for 2025. And for those in need of tax losses, I have some suggestions from our 83 REIT coverage universe.

My top fresh money buys this month are both new additions to the First Rate REITs List. To make room for them, I’m bidding adieu to a long-time holding of this service, which despite a rock-solid business is sitting at a sizable loss from my initial recommendation—making it also a good candidate for tax loss selling.

Once again, I’d like to extend an offer to all Dividends Premium members to join my Dividends Roundtable on Discord. It’s complementary to your subscription and it’s a great place to have all your questions answered in between issues of Dividends Premium and Dividends Premium REITs.

Here’s to a great holiday season and profitable Happy New Year!—RC

REITs Weaken But Prospects are Strong Heading into 2025

You can blame persistently high inflation and the Federal Reserve’s reluctance to cut interest rates “too quickly.” Or direct your ire to doubts about the effectiveness of China’s economic stimulus, and rising expectations for weakness in the global economy. And uncertainty about just what policies the incoming Trump administration will pursue beyond cutting regulation and taxes hasn’t helped either.

I think all three factors have played a role in setting back the stock market this month. But whatever the reason, the April to September rally in real estate investment trusts has sputtered out. And if you remove the data center REITs—which are still riding high on artificial intelligence hype—property sector underperformance is considerably worse.

As of Thursday’s close, the Real Estate Select Sector SPDR Fund (XLRE) was up just 2.42 percent year-to-date. That compares to 24.47 percent for the

SPDR S&P 500 ETF Trust (SPY). And though our First Rate REIT List has had several sizeable winners this year, my picks are sitting at an average 2024 return in the mid-single digit percentages, with just a handful of trading days left in the year.

We’re still making money and building on the gains of previous years, including an almost identical return in 2023. And if prices can firm up around where they are now, we’ll be able to report an average annual compound return of a little over 12 percent from the REIT Sheet’s top recommendations for its first five years since inception at the end of 2019.

Nonetheless, it’s fair to ask if REITs will remain underperformers in 2025, as they’ve been in 2022, 2023 and now 2024?

Three Reasons REITs Will Return to Favor in 2025

The selling pressure of the past couple days has been ugly. But my view is it’s only a matter of time before this essential sector returns to favor. That’s for three main reasons.