In 2015 just one third of U.S. REIT stocks earned a positive return, so no one was surprised when the market went flat in the last week of the year. No sector has performed well, but two sectors appear to have fallen even further. The much anticipated hike in interest rates had sounded alarm bells for many, hence few dared to invest in real estate investment trusts and many investors sold large amounts of dividend stocks. If anything, this information shows a low market sentiment for REITs.
However, 2015 has drawn to a close, so we must look forward to the coming year. Investors must remember that Wall Street and Main Street operate quite differently. Most REITs have had a good operational track record, indicating a clear discrepancy between fundamentals and financial market behavior. In fact, the future looks rosier for those who decide to invest in select real estate investment trusts.
I am watching the situation with interest. I feel this might be the biggest investment opportunity for REITs since the great recession, but investors continue to err on the side of caution and no one appears to be in a rush to buy REIT stocks. The market has experienced a run of major and minor selloffs, so stocks are down. Inconsistent economic signals don’t appear to have an adverse effect on REIT fundamentals. I agree that it’s difficult to predict what will happen in the near future, but it will be fun to watch when the investors rush to buy REIT stocks.
We notice underperforming small-cap companies rebound, like CorEnergy Infrastructure Trust did last week. Wheeler Real Estate Investment Trust wrapped up the year with a 51 percent drop; however, last week’s 7 percent hike rendered them the best performer of the week. Such peculiarities tend to show up on our charts when the stock market hits a low.
In contrast, Lodging and Timber performed badly last week, in fact, Sunstone Hotel Investors shares fell by 10 percent. The company have an erratic dividend policy known as catchup dividend, for example, last quarter they paid $1.26, whereas in previous quarters they have paid $0.05.
Companies: CorEnergy Infrastructure Trust (NYSE:CORR), Sunstone Hotel Investors, Inc. (NYSE:SHO).
Disclaimer: This is not a recommendation to buy or sell stocks. The highest-yield stocks are not necessarily the best portfolio investment choice. The purpose of this report — which is essentially a snapshot of information available on December 31, 2015 — is to reduce your stock analysis by enabling you to compare stock and sector performance. Please do your own due diligence before making any investment decision.
As of November 30, 2015, the equity REITs are constituent companies of the FTSE NAREIT All REITs Index. Companies whose equity market capitalization is lower than $100 million have been disregarded.
This report is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.
Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.