Over the last few months, real estate investment trusts (REITs) have shown that they are able to survive in tough conditions, at least compared with most other stocks. However, there have been signs of weakness for REITs lately and this is likely to continue.
With recession fears still looming, real estate operators are facing yet another difficult situation brought on by rising unemployment, which could result in lower office and retail space demand. And rising inflation will come with higher interest rates, leading to higher borrowing expenses for REITs. Considering these circumstances, the outlook for REITs is not all that promising.
With all these concerns and obstacles tied to the market and the industry, you may think it wise to stay away from real estate, at least until we see an improvement in consumer spending and the banking sector. Kiplinger suggests that we reconsider these thoughts, and actually suggests some names to invest in that could offer us the advantages we are all looking for.
Let's take a look at some of the lesser-known real estate names Kiplinger's Jeffrey R. Kosnett believes would be good options this year and the next year too:
- Entertainment Properties (NYSE: EPR), which owns multiplex cinemas, provides entertainment for customers who can't afford to spend a lot of money going to beach resorts and theme parks. The company has impressive dividend growth; at the beginning of this year, its dividend was lifted by 10.5%.
- First Industrial (NYSE: FR) benefits from strong exports and a hefty dividend. In addition, its debt, though high, is at low fixed rates.
- Realty Income Corp. (NYSE: O) is another stock to take a look at, as the company has strong cash flows.
- Health care REITs Health Care REIT (NYSE: HCN) and HCP Inc. (NYSE: HCP) also make the list; both offer investors good dividends and some nice capital growth.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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Reader Comments (Page 1 of 1)
6-26-2008 @ 4:20PM
winslow said...
When the charts from Yahoo on these REITs are examined, does the growth of $10,000 over time, include reinvested dividends??