Barron's recently suggested five real-estate investment trusts (REITs) for savvy investors who are on the prowl for dependable income.
The FTSE Nareit All Equity REITs index has returned 17.8% as of May 28, compared with 12.7% for the S&P 500 index, Barron's explained.
REITs are popular among income investors because they’re required to pay out at least 90% of their taxable income to shareholders, Barron's said.
Barron’s five picks were derived by examining the largest holdings of five real estate mutual funds with strong one-year performance.
- DFA Real Estate Securities I (DFREX) has a one-year return of 21.65%. Its biggest holding is American Tower (AMT)/
- Neuberger Berman Real Estate (NREAX) has a one-year return of 20.72%. Its biggest holding is also American Tower (AMT).
- Principal Real Estate Securities (PRRAX) has a one-year return of 20.25%. Its biggest holding is Prologis (PLD).
- Cohen & Steers Real Estate Securities (CSEIX) has a one-year return of 19.98%. Its biggest holding is Equinix (EQIX).
- DWS RREEF Real Estate Securities (RRRAX) has a one-year return of 19.54%. Its biggest holding is Simon Property Group (SPG).
To be sure, a recent Gallup poll found that 35% of Americans say real estate is the best long-term investment option, easily beating the 27% preference for stocks.
The April 1-9 Gallup poll was conducted amid the ongoing bull stock market, but before the recent stock index records. In recent years, the real estate market has also been hot, with home values in 2018 the highest on record, and Americans expect home prices to continue to rise.
Previous Gallup analysis showed that stock ownership has declined among most major U.S. subgroups since before the recession, with the exception of upper-income and older Americans.
Stock owners, not surprisingly, are more positive than the general public is about stocks as an investment, Gallup reported.
Thirty-seven percent of stock owners (compared with 27% of U.S. adults) rank stocks as the best long-term investment option, essentially tying it for first with real estate (38%) among stock investors.
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