Be REIT Where The Money is in 2013

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

One of my major predictions for 2013 is that real estate will come back in a big way. I think that investors will begin to scoop up more homes, more will be built, and the economy will once again begin to thrive. Clearly I’m a little optimistic, but if I’m right, you’ll want to make sure that you’re in the market and ready to go. You don’t have to go buying houses or apartment complexes though, just buy some REITs. Some of my favorites are Simon Property Group (NYSE: SPG), One Liberty Properties (NYSE: OLP), and HCP (NYSE: HCP).

Why REITs?

A real estate investment trusts is much better than you going out and buying property yourself. Through these REITs you will be diversified in real estate. You don’t have to worry if one apartment is demolished by a tenant, because it’s likely that you own a few hundred of them.

Diversity isn’t the only good thing about these trusts; they also have to pay out at least 90% of their taxable income to investors. That’s why these investments carry such a high P/E ratio and are sought after by investors looking to earn some income.

Simon Property Group

This REIT doesn’t pay the highest dividend, but it sure is stable. Simon is the largest real estate investment trust in the United States. They operate commercial real estate, specifically malls. You may have been to one of their properties, as they’re located worldwide.

Simon continues to acquire and develop new properties. As they do, that dividend continues to grow. Simon is a great REIT for the long term holder. Even though I don’t like malls, I still feel that they will always be around in some form, so why not collect a quarterly check for believing the same thing?

One Liberty Properties

One Liberty Properties invests in anything they can get their hands on. The company primarily focuses on retail, but they also own office buildings, industrial centers, and flex areas across 29 states. In those 29 states the company has some 98 properties.

So, what do they own? An office building in California, a PetSmart in Louisiana, an Office Depot in Texas, and a CarMax in Tennessee. One Liberty Properties is an incredibly diversified commercial-orientated REIT.

With the incredible diversification of this company, you’d expect some out of the world pricing, but it’s actually not too bad. They also offer the biggest dividend of my favorite REITs, at just over 7% yield.

HCP

HCP is focused on healthcare real estate across the United States. The company owns the largest portfolio of any healthcare related REIT, and it is an incredibly diverse company.

Most of the properties are focused in Texas and California, but outside of that the company owns some form of healthcare buildings in 46 of the 50 states.

The buildings that the company owns are in the form of hospitals, medical offices, and senior housing. It’s a very lucrative market, and HCP proves that with a dividend that’s closing in on 5%.

If you like the medical aspect of things, then you should check out HCP.

Other REITs

This article was made up of mostly commercial-based real estate. These are my favorite types of REITs. There are others out there that focus on housing, and some that just pick up everything but the kitchen sink. Research is obviously required before you make a decision, but if you’re in the market looking for yield I don’t think you can go wrong with a REIT.

 


Ash1402 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus

Compare Brokers

Fool Disclosure