2 Cheap REITs Throwing Off High Yield

Last week, a stronger-than-expected GDP report spooked Wall Street, causing stocks to sell off a bit. The fear of higher rates is the boogey man that keeps traders up at night, because the removal of the low interest rate punch bowl could bring stocks’ five-year party to a screeching halt. For income-seeking individual investors, higher interest rates can’t come soon enough but the truth is that it won’t happen fast enough to do any good. Even when the Fed does start to back away and let rates rise, it won’t let them go up very fast, and it will be many years before we see fixed-income investments provide acceptable returns that meet the need for generating income.

If you have cash to put to work today, it’s a different picture. Stocks have increased substantially and most blue chips are no longer a bargain. The REIT indices yield just about 3%-3.5% and the larger REITs trade well above book value. To find income that meets our needs, we have to move away from the larger real estate related investments and be focused on valuation as well as yield: Arbor Realty (ABR) and Apollo Commercial Real Estate Finance (ARI).

Source: InvestorPlace

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