REITs Outperform Broader Market In May: Bet On 4 Solid Picks
Zacks Investment Research | Jun 03, 2018 09:23PM ET
A solid jobs report for the month of May has triggered chances of a rate hike this month by the Federal Reserve. However, investors in the REIT space can shrug off such issues. This is because even though REITs have traditionally depended on debt for their business and were considered as bond substitutes for the high and consistent dividend-paying nature making their short-term returns susceptible to rate moves, this time around, these companies seem to be better poised to brave the rising rate environment.
In fact, over the years, REITs have shored up capital and made concerted efforts to reduce leverage. These have resorted to equity capital rather than brooding too much on debt capital to finance their portfolio and carry on their business. Moreover, the healthy economy serves as a positive catalyst for demand for many of the asset categories.
Also, the returns for May indicate the abating of the rate hike concerns. In fact, REITs delivered an encouraging performance in the month, as well as outperformed the broader market in the month. Per the Zacks Investment Research
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