Want to know a little secret? When it comes to certain high-yielding sectors, many investors are putting too much stock in the theory that rising interest rates will kill their returns and result in losses. Case in point — real estate investment trusts (REITs). Designed to allow regular retail investors to invest in commercial properties, REITs are required to pay out the vast bulk of their cash flows as dividends. That payout requirement produces yields in the 4% to 7% range for the majority of the sector. But the specter of rising interest rates has many investors spooked about REITs’ potential total returns in the upcoming few years.
Well, don’t fret. REITs and your portfolio will be just fine. While REITs do feel rising interest rates immediately, this knee-jerk reaction from market participants fades and performance rebounds sharply. So if you’re still looking for income or want a great total return, REITs should still make up a percentage of your portfolio. Here’s three top notch REITs to buy today: Realty Income Corporation (O), SL Green Realty Corp. (SLG) and Health Care REIT, Inc. (HCN).
Source: InvestorPlace
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