Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


[Shocking] Live Interview Reveals Million Dollar Income Secret

[Shocking] Live Interview Reveals Million Dollar Income SecretOur top income analyst is about to pull the wraps off a secret project he’s been working on. And the results will shock you. Because if you follow the simple program he’s put together, you could generate up to $1,230 in instant income so many times… you’ll have a shot at making $1 million. He’ll reveal how it works during a live interview on February 21st. Sign up to watch it here.



Reality Bites for Retail REITs

By Igor Greenwald on September 7, 2017

Real Estate Investment Trusts, or REITs, benefit from one of the juiciest tax breaks around. They’re exempt from corporate income tax on the dividends distributed to shareholders, which for REITs must equal at least 90% of their taxable income.

As a result, the number of REITs and the capital invested in them have soared in recent years. The market value of publicly traded U.S. REITs topped $1 trillion by the end of 2016, more than doubling in five years. The number of REIT stocks dipped for the first time in eight years last year but, at 224, was still up 65% from the cyclical low in 2008.

In addition to the REITs’ tax advantage the investment boom was driven by the sector’s strong returns. U.S. REITs outperformed all other investment assets in 2010, 2011, 2012, 2014 and 2015.

Since 2015, the pace of gains has slowed and REITs’ performance has lagged the broad stock market. But it hasn’t been terrible. The FTSE NAREIT Equity REITs Index returned 8.5% in 2016 and 3.7% for 2017 as of  Aug. 31.

But the composite returns don’t tell the whole story. Beneath the placid surface, the REIT sector has been shaken by some seismic shifts in fortunes.

For owners of malls and shopping centers accounting for roughly 15% of REITs’ market capitalization this year has been a disaster. They were down 14% in the aggregate year-to-date, accounting for the bulk of the sector’s struggles. (Return numbers above and below are as of Aug. 31.)

Like their tenants, the retail REITs are suffering the downside of the accelerating shift from bricks-and-mortar stores to e-commerce. Amazon’s acquisition of Whole Foods and highly publicized discounting of select groceries at Whole Foods stores  has given investors another reason to worry about the future of supermarkets and the shopping plazas they anchor.

The flip side of that coin is that e-commerce requires a lot of computer servers, which in turn require real estate. The six REITs specializing in date centers have in the aggregate returned 32% year-to-date. 

Infrastructure REITS have returned 34% year-to-date, and that’s a subsector dominated by three owners of land underneath cell towers.

Other REITs are riding cyclical tailwinds. Those specializing in industrial properties are up 19% in 2017, while landlords renting out single-family and mobile homes have returned 16% and 22%, respectively. The much larger grouping of apartment building REITs returned 8% over the first eight months of this year.

REITs have historically traded in tandem with bonds but this year have failed to capitalize on the bond rally. It’s hard to blame the modest average REIT yield of around 4% when investors seem perfectly happy with barely half that from the data center and cell tower darlings. Retail REITs are now yielding almost 5%, which may not be enough given their steadily dimming long-term prospects.

The more generic risk is that, after failing to cash in on reduced bond yields of late, more investors will cash out when rates rise again. Until the yields improve, REIT buyers would do well to remain choosy.

You might also enjoy…


Forget Buy and Hold. Here’s how to retire faster…

I’m not a fan of “buy and hold.” Gurus like to tell you that patience is the key, but I call horse puckey.

We’ve discovered an investing technique that consistently pays out easy-to-repeat profits.

One that’s proven to beat the market 2,082% in head-to-head testing.

And one that’s generated over 488 winners since 2011.

This method is so powerful, in fact, some of the investors we’ve let use it reported back to us saying they’ve made $71,425… $82,371… and even as much as $151,000 in a single year thanks to this “trick.”

That’s how powerful this investing technique is!

What what exactly is this mysterious method? I’ve put all the details together here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.