3 Beaten-Down Dividend Aristocrats We're 'SWANning' With Anyway

Summary

• Over the long term, real estate investments have generated incredible wealth.
• In our view, gaining exposure to real estate markets through REITs is a great option for investors.
• Regardless of this pandemic, we're continuing to add shares opportunistically. And it’s because of the margin of safety that I sleep well at night.
• This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

This article was co-produced with Nicholas Ward.

Earlier in the week, I published a blog post titled "REITs Get No Respect – But They Should." Which got me thinking…

Throughout the COVID-19 pandemic, we've seen plenty of negative coverage of REITs. Lots and lots and lots of it, in fact. While we ourselves have offered our own fair share of bearish commentary, that’s been on a subsector and/or company-specific level.

While we know there are areas of the REIT space we prefer to avoid due to their relatively higher risks and continued uncertainties. There are many individual examples that still seem attractive, no matter what the naysayers try to promote.

The fact of the matter is, over the long term, real estate investments have generated incredible wealth. So using REITs to gain exposure to real estate markets is a great option for investors.

You just have to know how to do it.

The Real Value of REITs

To help explain the real value of REITs, we put together five of their most overlooked bullish features: Consider how the larger sector:

• Is a $1 trillion-plus equity market
• Is an exceptionally – even exclusively – liquid form of real estate ownership
• Provides an excellent form of portfolio diversification to reduce overall risk
• Offers extreme levels of corporate transparency
• Features an average dividend yield of 3.6%.

Again now, that shows the larger sector is a great category to look into. We'd never paint every REIT with a broad brush though. That would be foolish, to say the least.

The stock market is just that: A market of stocks. This means there almost always will be high-quality companies trading above fair value… at fair value… and – a most importantly to investors looking to accumulate shares – below fair value.

Buying the highest-quality

Analyst’s Disclosure:I am/we are long ESS, FRT, O. 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.