Tags: REITs | ETF | investing | property

Motley Fool: 3 Best REIT Exchange-Traded Funds for Safety, Dividends

Motley Fool: 3 Best REIT Exchange-Traded Funds for Safety, Dividends
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By    |   Thursday, 19 May 2016 01:00 PM

There isn’t much variety in exchange-traded funds that own real estate investment trusts, which don’t have that many listings compared with the broader market.

“With just over 200 REITs trading on U.S. exchanges, there are only so many ways to slice up the sector and put it in unique packaging,” financial blog Motley Fool says, recommending three ETFs that provide adequate exposure to the property market.

While REITs are generally sought for steady dividends, the overall value of the industry hasn’t budged since before the 2007 financial crisis, at least according to the Dow Jones Equity All REIT Index. The benchmark’s last peak was in early 2015, but it is up 2.3 percent this year.

Motely Fool’s Recommended REIT ETFs

  1. Vanguard REIT ETF (VNQ): “Easily the industry king by assets, this ETF is also one of the least expensive. This fund should be a favorite among conservative investors who would like a little extra yield (3.8% at the time of this writing), but who want to avoid the risk of the highest-yielding mortgage and hybrid REITs.”
  2. iShares Dow Jones U.S. Real Estate (IYR): “Step up on the risk spectrum and you'll find a bigger yield waiting for you. This high-yielding REIT ETF offers a 4.82% dividend yield at the time of writing because it doesn't discriminate. It holds everything from traditional equity REITs to mortgage REITs and even timber REITs.”
  3. Schwab U.S. REIT ETF (SCHH): “This fund gets a top spot for being the cheapest REIT ETF on the market, with an annual expense ratio of just 0.07% of fund assets. Holding just 106 REITs at the time of writing, it's the most concentrated ETF on this list.”

The most worrisome area of the REIT market consists of shopping malls, because of the difficulties faced by retailers this year.

“All signs point to things getting worse for this group of companies,” Bloomberg News reports. “Shares in North American REITs with a large portion of their investment concentrated in malls are now down 10 percent in the past year, compared with a 6 percent rise across all REITs.”

Retailers are facing a broad slowdown in sales at brick-and-mortar stores.
“Retail traffic across all types of retail real estate — including malls, strip centers, and other shopping areas — has been posting monthly declines of as much as 18 percent in the U.S. and Canada from the year before, according to analysis firm Prodco. Traffic to luxury retailers has fared even worse,” Bloomberg reports.

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Motley Fool recommends three ETFs that provide adequate exposure to the property market.
REITs, ETF, investing, property
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2016-00-19
Thursday, 19 May 2016 01:00 PM
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