Building A Sucker-Yield-Free REIT Portfolio

Summary

• By adhering to time-tested value investing strategies – buying high-quality stocks at discounted prices – investors can build a stress-free portfolio without chasing yield.
• For those who don’t know, a sucker yield is a dividend that doesn’t match up with its company’s fundamentals.
• I cannot stress the importance of maintaining sound diversification and that means I would never recommend putting all of your eggs in one basket.
• This idea was discussed in more depth with members of my private investing community, Rhino Real Estate Advisors. Start your free trial today »

While I may or may not have coined the term “sucker yields” (I think I did, but who knows), there’s nothing new about the concept.

For those who don’t know, a sucker yield is a dividend that doesn’t match up with its company’s fundamentals. It’s the kind of payout that looks really good while the investment sun is shining, but as soon as the wind starts blowing and the clouds start moving in, that thing is going to collapse like a house of cards.

In short, it’s just not sustainable. And, more often than not, it’s fairly obvious that it’s unsustainable to anyone willing to look into the matter.

This isn’t to judge those who have fallen for a sucker yield before. It happens to the best of us eventually in some way, shape or form. None of us are immune to such things, which is why they keep popping up.

Since the dawn of mankind, there have been yields and potential yields from investment opportunities. Also since the dawn of mankind, there have been suckers ready and willing to fall for deals that are too good to be true.

I give you… Adam and Eve.

If you want a more historical example of humanity’s tendency to invest in bad ideas, look no further than the saying, “If you believe that, I’ve got a bridge to sell you.”

This bit of mockery dates back to at least 1901 thanks to the existence of the Brooklyn Bridge and creatively convincing con men such as George C. Parker.

As The New York Times puts it, “Since the bridge was completed in 1883, the idea of illegally selling it has become the ultimate example of the power of persuasion. A good salesman could sell it, a great swindler would sell it, and the perfect sucker would fall for

Analyst’s Disclosure:I am/we are long SPG, SKT, CONE, KIM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.