@Sand you recently rotated into VTR and O (REITs which have recently sold off. have yields above 5%, and have a history of increasing payouts). Could you walk us through your methodology for finding a list to consider and ultimately choosing your investments?
- Why REITs at this time over the other seven categories?
- Any particular sites that are helpful?
- Do you use an alert/subscription service to generate ideas?
- Do you use FFO, a debt measure, payout ratios and/or other metrics for weeding out the potential laggards?
- Other advise for investment selection?
Sorry - worked again today for way too many hours.
As a note I added to VTR and O, not initiated positions. I have held them for a while, since fall of '08, to be exact. Both are the stalwart leaders in their category - O as a triple net lease company and VTR as an owner of retirement homes and associated elder care. I like the VTR sector a good bit simply due to demographics - elderly population is growing. I also bought SKT at the end of the year (just a shade in the red there) as the retail bloodbath is overdone (IMO), particularly for what SKT does (I am more leery on KIM). I also hold some DLR (another market leader) and CHCT.
So why REITs right now? Well, they're unloved. The market drivers right now are heavily concentrated and some very good names are being left behind. I'll gladly take a solid 4-6% yielding growing company. On top of that REITs got a massive tax windfall in the tax bill. Once that becomes known people will start holding them in taxable accounts - hopefully driving demand.
I read a lot of seekingalpha. Brad Thomas and some others write a lot about REITs. I generally look for solid companies that can remain solid in a downturn.
No alerts or subscriptions. I just read.
I get interested when dividend yields for a particular ticker starts to get well above the norm for itself. That means they're either in deep trouble and about to cut :cough:GE:cough: or they are being tossed aside. Let's face it, if a ticker isn't a large growth company or a FAANG it isn't seeing these massive gains. My small sector ETFs have lagged hard, for example - I posted about this in the regular stock thread.
Advice - just read a lot. I try to weed out companies that look to have a high debt load or an unsustainable yield. Or a company that isn't growing their yield (don't like T much because their increases are tokens - they've maxed out).
So this is important to note given what we're talking about here. In the last recession I read an article (which I've not been able to find) where a guy did a study and found that all but one company in the S&P with a yield of 6+%
cut the dividend before the market turned in 2009.
Investing in high yield issues, particularly REITs and C-Corps, is dependent on overall economic conditions. I really like
this guy's articles as a basic look into when economic conditions start to change.
If macro conditions change this whole area sees pressure. In 2008 some of these areas got absolutely smoked.
Also note that I invest the way I do for my own reasons. Some folks here may be better off finding dividend growth companies, etc. I'm at the point where my stash is on the cusp of
FU money (as I define it for myself and my situation). I want to be diversified and stable - with a beta well below one. I'm looking for companies that will churn out dividends the same as they did in 2009. I'm looking for issues that shed cash but keep things safe.