Dividend Stocks Selling at Bargain Prices

Earlier this year, the Fed spooked the market by suggesting that it would reduce "quantitative easing." This resulted in a sell-off of interest rate-sensitive stocks such as real estate investment trusts. As we now know, the recent shenanigans in Washington have led to tapering being taken off the table, at least for the foreseeable future. As a result, interest rates may remain stable or even move lower. This has resulted in a buying opportunity for REITs.

For most companies, depreciation of equipment is a legitimate expense since equipment wears out and must be replaced. Real estate does not wear out, though, and may even appreciate over time. FFO is thus a measure of the cash flow and the dividend-to-FFO ratio is a good indication of a company's ability to maintain dividends: Health Care REIT (NYSE: HCN), Realty Income (NYSE: O), Simon Properties Group (NYSE: SPG) and Apartment Investment and Management (NYSE: AIV). The decision by the Fed to continue asset purchases, combined with the improving economy, is a large plus for REITs.


Source: Motley Fool

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