Ditch Your Low-Rate Savings Account… Try These 3 REITs Instead!
It’s no secret low interest rates have made it difficult for savers like us.
Thanks to the Fed’s grand experiment of cutting interest rates to zero after the financial crisis, you’ve endured more than a decade of earning next to nothing on cash kept in a traditional savings account.
And now, thanks to low inflation and some concerns about the economic growth in the U.S., investors are expecting the Fed to actually cut interest rates before the end of the year!
It truly is a frustrating time for traditional savers.
But fortunately, there are some much better options than your local bank or credit union. And today, I want to take a look at some of the best stocks to help jump-start the income you can get from your hard-earned savings!
REITs Offer Great Income, Plus Protection in Today’s Market
If you’ve followed The Daily Edge for some time, you already know that I’m a big fan of Real Estate Investment Trusts (or REITs).
As the name implies, REITs invest in real estate opportunities, and generates profit when those investments pay off. And while low interest rates have played havoc on individuals with savings accounts and certificates of deposit, those same rates actually help REITs.
That’s because low interest rates make it cheaper for REITs to borrow money to fund property purchases. And lower rates also help to drive up the value of real estate because there is more demand from investors who can better afford mortgages.
In short, if you’ve been waiting on the sidelines for just the right moment to invest in these real estate plays, now is the time!
I’m especially excited about the prospects for REITs after watching how many of these stocks traded over the last couple of weeks when the market became a bit more volatile.
Case in point: Friday, May 10th and Monday, May 13th were difficult days for traditional investors. Over this long weekend (if you want to call it that), the S&P 500 fell by 2.1%. The Dow dropped by more than 500 points. Some blue chip stocks like Boeing (BA) and Caterpillar (CAT) fell by more than 4.5%.
If you tuned in to the financial media on those days, you could have easily detected a sense of panic in the voices of commentators.
But during these fearful two days in the market, real estate stocks actually rose, with the average REIT gaining 0.9%.1 Talk about a great way to protect and grow your wealth!
Today, with interest rates still at exceptionally low levels and the Fed widely expected to cut rates before the end of the year, investors are looking for better opportunities to lock in steady yields from their investments. And that’s driving a lot of capital into the REIT industry.
I want you to take advantage of this opportunity by owning shares of the best REITs the market has to offer. Here are three REITs I have my eye on as these stocks gain favor on Wall Street.
National Retail Properties Inc. (NNN)
National Retail Properties has sidestepped the carnage from Amazon’s retail dominance by focusing on locations that people visit on a near daily basis. Think about gas stations, convenience stores, and quick service restaurants. These are the locations operated by NNN, and these locations aren’t going away any time soon. Better yet, NNN engages in long-term agreements with its tenants, with rents gradually increasing each year to account for inflation.
This disciplined approach has allowed NNN to pay investors a $0.50 quarterly dividend which will almost certainly be raised this year. (NNN has increased their dividend each year for the last 29 years!)
Shares currently pay a 3.8% yield. But that yield will likely increase with a higher dividend this year. Plus, with the strong job market helping to drive more traffic to NNN’s locations, the company’s strong business should drive the stock price higher, adding more value to your investment.
Digital Realty Trust Inc. (DLR)
Digital Realty has a bit of a different spin on the REIT concept. The company owns 198 data centers around the world and rents space for equipment used by tech customers like Oracle (ORCL), Comcast (CMCSA) and Verizon (VZ).
With so many groundbreaking developments in 5G, artificial intelligence, autonomous driving and more, demand for DLR’s data centers will continue to grow. And that means steady profits and bigger income payments for investors!
Today, DLR offers investors a quarterly dividend of $1.08, up 7% from last year’s payout. That represents a 3.7% yield which is very attractive given the current low interest rates. Plus, with so much demand for data and computer processing power, I expect DLR’s business (and payouts) to grow steadily for years to come.
Welltower Inc. (WELL)
Welltower is the largest U.S. healthcare REIT, owning facilities such as hospitals, clinics and nursing facilities. The company benefits from increasing demand for healthcare services thanks to our aging demographic.
I’m particularly fond of WELL because the company has raised its dividend every year for the last 14 years. That includes the financial crisis period in which many companies had to cut the amount of cash paid to investors.
Over the past year, Welltower purchased about $2.5 billion in new medical properties, all of which should generate payouts for us as investors this year. WELL’s $0.87 quarterly dividend adds up to a 4.3% yield, and you can expect that yield to grow this year as the company increases its payout once again.
And there you have it! Three great real estate plays to take advantage of low interest rates and the rising demand for stable cash-generating investments to help fund American’s retirement.
Stay tuned for more updates on income strategies and retirement opportunities as the U.S. economy continues to grow!
Here’s to growing and protecting your wealth!