Dividends Premium REITS: October 2024

Dividends Premium REITs

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Dear Dividends Premium Member,

Welcome to your first issue of Dividends Premium REITs! This is the companion post to the Dividends Premium I sent you a week ago.

Starting in November, you’ll be receiving Dividends Premium and Dividends Premium REITs every month, with usually a week to 10 days between them. Next week, I’ll be rolling out the Dividends Premium Roundtable, where you can pose questions and comments directly to me anytime, as well as chat with your fellow members.

First, here’s a little about your first installment of Dividends Premium REITs. Like Dividends Premium, it’s in three basic sections.

My REITs Market Commentary looks at the real estate investment trust sector as a whole. I highlight macro factors affecting share price performance, as well as trends affecting earnings and dividend growth. And I identify the best and worst property types to own in the current environment.

As with Dividends Premium, I’m not here to drown you in market indicators and minutiae. I just want you to understand what’s affecting our REIT investments, why it’s happening and what’s likely to come next that will affect investing decisions we need to make.

The second piece is Investment Strategy. I follow a four-part strategy for REIT investing, which I highlight in every issue of Dividends Premium REITs. That’s to own only REITs with strong underlying businesses, to never pay more for stocks than my highest recommended entry points and to buy in increments, to be willing to take profits occasionally and to always balance and diversify holdings.

My “First Rate REITs” list features 19 favorite real estate investment trusts chosen based on my strategy, and it’s highlighted every month. As with the Dividends Premium portfolio, this REITs portfolio is not a new creation. It’s been battle tested, starting with its inception in December 2019. And you’ll be able to see the performance returns in every issue of Dividends Premium REITs.

The nearly five years since this portfolio’s launch have been an exceptionally volatile time for REITs. They started with perhaps the biggest crisis in REIT history so far—a pandemic that literally forced many property owners to shut their doors while bankrupting tenants, and with lingering after effects.

Since early 2022, we’ve seen the steepest rise in borrowing costs in over 40 years. All but the very strongest REITs have sharply curtailed the investment needed to fuel cash flow and dividend growth. And the most heavily leveraged have slashed dividends, as their debt interest burdens rose sharply.

It’s no exaggeration to say only the very strongest REITs have been been able to keep their heads above water during this troubled time. But we’ve consistently achieved our objectives of generating safe, high and growing income and reliable capital growth, while ensuring relative stability of principal. And that gives me a great deal of confidence that we’ll do the same going forward, come what may.

In addition to the First Rate REITs portfolio, I also offer advice on a broader coverage universe of 70 plus real estate investment trusts. Once a quarter, I present my research in a master table featuring my take on each REIT’s earnings, strategy and guidance, risk ratings, buy/hold/sell advice and other key information. Look for the next edition in December.

Every recommended stock has a “highest recommended entry point.” That’s the highest price I would pay for the stock under any circumstances. If the price goes above that, I’m not buying. I also highlight “Dream Buy Prices,” low points historically reached only during real market crises where buyers have ultimately been rewarded with windfall gains. And I feature “Profit Taking Points,” price levels that merit taking some money off the table.

The third section of Dividends Premium REITs features the best “fresh money” buys for the month. Most often, they’re companies already in the portfolio. But this is also where I’ll introduce new recommendations.

This month, my two top Dividends Premium REITs picks are industrial/logistics property leader Prologis Inc (NYSE: PLD) and premium office property owner BXP Inc (NYSE: BXP). Both companies are highlighted in the issue below.

Thanks again for putting your trust in me by subscribing to Dividends Premium. As always, please share your thoughts with us anytime on how I can better serve you. Here’s to your wealth and Happy Halloween!--RC

Dividends Premium REITs: Favor Laggards over Leaders

By Roger S. Conrad on October 28, 2024

Real estate investment trusts’ summer surge has largely stalled since the Federal Reserve cut interest rates September 18. The S&P 500 REITs Index is still up around 25 percent since mid-April, when talk of rate cuts started to heat up. But since the day the Fed actually took action, the Index is actually underwater including dividends.

In my view, that’s pretty classic “buy on rumor, sell on news” behavior by investors. And it’s made more extreme by the fact that there are a rapidly dwindling number of decision makers both human and algorithmic, in a stock market where for the first time ever more money is passively invested than actively managed.

I think history is going to show the sellers cashed out way too soon.