REITs Offer a Compelling Anchor and Booyah!
That translates into one thing: FEAR. That makes it most difficult for investors to predict where to zig or to zag, making stock selection increasingly difficult. So where do intelligent investors find the next pockets of opportunity, especially the companies that earn excess of returns over long periods of time?
REITs: The Anchor and the Buoy
Oh yes. Don't you remember? REITs payout more than at least 90% of their income to their shareholders in the form of dividends, and you pay taxes only when you decide to sell . Another key differentiator for REITs, compared with non-REITs, is total return ingredients. Remember that a non-REIT stock is anchored by capital appreciation and dividends are simply the "icing on the cake." However, REITs are just the opposite. In fact, REITs, on average, return 60% of total return in dividends -- making dividends the anchor and growth the buoy.
Speaking of Buoy. What about Mr. Booyah?
Oh yes. Jim Cramer loves REITs. I have watched many of his guests this year on CNBC's "Mad Money" and I can tell you that Mr. Booyah knows how to pick 'em. For example, Cramer interviewed Edward Aldag, CEO of Medical Properties Trust (MPW) on Oct. 8. The Birmingham, Ala.-based health care REIT is paying a splendid 6.69% dividend yield with a year-over-year total return of a whopping 31.17%. MPW is the only pure hospital focused REIT with the $1.621 billion (market cap) REIT's shares are trading at $11.96. A solid buy!
Another strong anchor and booyah play is Healthcare Trust of America (HTA) . Again, another Cramer pick as he interviewed HTA's CEO, Scott Peters, on Nov. 29. I like Cramer because he knows how to pick the new kids on the block and the stalwart brands.
Scottsdale, Ariz.-based HTA, considered a new kid, listed as a public REIT last year, has begun to carve out a niche in medical office buildings. Just a few days ago Wells Fargo issued an outperform rating on the $2.122 billion (market cap) company with shares trading at $9.90. Wells believes the shares could reach $11.50 (I do too) with a steady and reliable dividend yield of 5.81%.
Booyah loves steady dividends and he certainly picked a great guest when he interviewed Steve Tanger, CEO of Tanger Factory Outlet Centers (SKT) . Forget the fact that Tanger and I are both Carolina boys. The Greensboro, N.C. company has built an impressive track record of paying dividends. So impressive that Tanger will soon be inducted into S&P's, dividend aristocrat club -- meaning Tanger will have paid consecutive and increased dividends for more than 20 years in a row.