Co-produced with Beyond Saving
As income investors we follow an investment style where we focus on the income that our portfolio generates. If we are going to tie up our hard-earned capital into owning a business, we want to get paid.
One of the greatest inventions for dividend investors is the Real Estate Investment Trust. REITs provide retail investors access to one of the best cash-flow businesses around – owning real estate. Buying a piece of real estate directly is a relatively large commitment. With prices of even modest rental properties over $100,000, you either need to have a lot of cash or be willing to take on debt.
Real estate has long been a place for the wealthy to invest and store wealth. Real estate values are relatively stable and are strongly biased toward inflating and the cash flow from real estate is very reliable. Virtually any human activity requires the use of real estate.
REITs open up the doors, allowing retail investors to invest in large real estate companies. Even for those who do have the wealth to buy real estate directly, REITs offer an attractive option. They are far more liquid, easily traded on major stock exchanges, and you can invest anywhere from $1 to millions depending on your means and goals.
The combination of high cash flows from rent and distribution requirements to maintain REIT status help ensure that REITs are relatively high-yielding investments. When you are looking to increase your income, REITs should definitely be one of the major sectors you invest in.
Today we are highlighting an opportunity in a closed-end fund that invests in property REITs. Aberdeen Global Premier Properties Fund (NYSE:AWP) holds more than 100 REITs in its portfolio and trades at a 11% discount to NAV. In other words, buying AWP is 11% cheaper
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