Friday, April 11, 2008

Lovely REIT-a

In February, I made a financial decision based mainly on the contrary indicator of daily newspaper headlines. Everything you saw, every day, on cnn.com, the radio, or the local paper, blared about the pending doom of the real estate crisis. The stocks of REITs (Real Estate Investment Trusts) tanked, and the CNBC loudmouths were predicting a falling sky.

I did some quick research using only these two criteria: Are they at or near a 52-week low, and have they historically paid a sweet dividend yield? I did zero additional research.

I picked up BRT, ABR, and NRF. All have done well in absolute terms (though BRT gave me some heartburn with an initial dip), and all pay a double-digit yield.

I still think they're good buys. Just think, even if the share price completely stagnates, you're still going to come out way on top b/c of the high yields (they earn their tax status b/c they pay out a sky-high portion of their earnings back the shareholders).

And the best part of it is that that's just going to keep compounding as long as you hold.

Quoth Albert Einstein, "The most powerful force in the universe is compound interest."

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