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REIT's:Pro & Cons
Posted on 8/28/11 at 11:45 am
Posted on 8/28/11 at 11:45 am
I've been invested in REIT's for the past two years and done pretty good. Yet several "financial advisors" always say stay clear of them. A stock that returns 14-19% dividend and price that doesn't fluctuate that much doesn't seem that risky to me. Any thoughts on the subject?
5
Posted on 8/28/11 at 11:47 am to BigD329
If financial advisors are saying steer clear of all REIT's it must mean that they don't like them because they can't make money off of them in some way. 
I think having a small allocations of them is a good thing.
I think having a small allocations of them is a good thing.
Posted on 8/28/11 at 11:59 am to notiger1997
I don't have any problem with them, find a good one and it pays.
Posted on 8/28/11 at 1:03 pm to BigD329
Where is this golden goose that returns a 14-19% div? AND it stays level? Must be a real looker.
Posted on 8/28/11 at 2:02 pm to kfizzle85
American Capital Agency (AGNC) pays a 19% dividend and in August '09 stock price $24.89 and closed Friday at $28.06.
Posted on 8/28/11 at 3:06 pm to BigD329
Since the Fed has basically said that they will keep interest rates low for the next two years, Reits could be a pretty safe bet until the interest rate goes up.
Posted on 8/28/11 at 3:17 pm to Rev1897
quote:Personally I see reits as long term investments. Realestate can be a volitile industry, so instead of timing it, just hold on.
Since the Fed has basically said that they will keep interest rates low for the next two years, Reits could be a pretty safe bet until the interest rate goes up.
Posted on 8/28/11 at 5:40 pm to Tiger4
quote:
Personally I see reits as long term investments. Realestate can be a volitile industry, so instead of timing it, just hold on.
That may be true, but most REITs make money on the difference in their purchased paper vs. the money they borrowed to buy said paper. That's a lot easier to do when interest rates are at 0.25%
Not sure if I 100% agree that REITs are long-term investments. They look to me to be cyclical
Posted on 8/28/11 at 8:13 pm to BigD329
I went and dug up some info on that, because it blew my mind, and I cannot explain it. Their website says 1.40, morningstar and yahoo both say 1.40. Annualizing that, as they do, gives you 5.60/28, or 20%. However, simply calculating dividends per share from their financials gives 6.5%. LINK ][LINK] Dividends paid = 226,079. Shares outstanding = 243,265. Dividend per share = 226,079/243,265 = 0.92*2 = $1.68 annualized. I even checked their investor presentation from the last quarter, and it also says $1.40. It also says book value per share at 6/30/11 was $26.76, but when I calculate it from the financials, I get $19. I am completely perplexed, these aren't really fungible numbers.
Posted on 8/28/11 at 8:37 pm to kfizzle85
Beta
0.4
Market Capitalization
5.0B
Shares Outstanding
178.5M
Volatility Avg
21.23
Avg Vol(10 day)
6.4M
P/E Ratio
4.0x
EPS(TTM)
7.03
Yield
19.96%
Dividend Announcement
6/10/2011
Ex-Date
6/21/2011
Payable
1.40 - QRTR Payable Date
7/27/2011
Date of Record
6/23/2011
0.4
Market Capitalization
5.0B
Shares Outstanding
178.5M
Volatility Avg
21.23
Avg Vol(10 day)
6.4M
P/E Ratio
4.0x
EPS(TTM)
7.03
Yield
19.96%
Dividend Announcement
6/10/2011
Ex-Date
6/21/2011
Payable
1.40 - QRTR Payable Date
7/27/2011
Date of Record
6/23/2011
quote:That is how 19% came up...
Their website says 1.40, morningstar and yahoo both say 1.40. Annualizing that, as they do, gives you 5.60/28, or 20%
Posted on 8/28/11 at 8:45 pm to Tiger4
Yes, I'm quite aware of that...
Posted on 8/28/11 at 8:47 pm to kfizzle85
Looks like you've done your homework in researching AGNC. I'm not real technical, but it has paid a $1.40/qtr. since I've owned it the last 2 years.Others I also own are HTS, NLY and CMO. They pay around 15%. I'm semi-retired and look for stocks that pay above average dividends, since I use that as income.
Posted on 8/28/11 at 8:49 pm to BigD329
Not really, I was just blown away by a 20% div. Regardless, there's definitely nothing inherently wrong with REITs. If you just want income and you can live with occasional fluctuations in share price, they're certainly worth holding as an asset class.
Posted on 8/28/11 at 9:06 pm to kfizzle85
Kind of thinking out loud, anyhow I looked at the link you provided and it said shares outstanding were 178,511,759. 
Posted on 8/28/11 at 9:20 pm to Tiger4
That must be it. I was adding the issued shares and the outstanding shares, although I think they're financials are worded funny. Even using the 178 figure I only get 1.26. IDK. eta: It probably has to do with cash dividends versus total shares issued over the past 6 months. I can't believe that's yielding 20% though, thats phenomenal.
This post was edited on 8/28/11 at 9:22 pm
Posted on 8/28/11 at 9:41 pm to kfizzle85
Havent looked at the fins but are there different classes of shares?
Posted on 8/28/11 at 9:54 pm to RedStickBR
No, it says:
Which I took to mean 178,509 of 300,000 issued and outstanding and 65,856 of 150,000 issued and outstanding, even though I couldn't figure out why they would phrase it like that.
quote:
Common stock, $0.01 par value; 300,000 and 150,000 shares authorized, 178,509 and 64,856 shares issued and outstanding, respectively
Which I took to mean 178,509 of 300,000 issued and outstanding and 65,856 of 150,000 issued and outstanding, even though I couldn't figure out why they would phrase it like that.
This post was edited on 8/28/11 at 9:56 pm
Posted on 8/28/11 at 10:05 pm to kfizzle85
For some reason, the 64k number is still being listed, even though that is the number of shares that were outstanding at the end of 2008. Since then, more shares have been issued, bringing the total to 178k. I don't see why they'd need to include the 150k or the 64k without at least some reference as to why it's there. Doesn't really make much sense at all.
This post was edited on 8/28/11 at 10:09 pm
Posted on 8/28/11 at 10:07 pm to RedStickBR
Only thing I can think of is they are trying to highlight the fact that the 64k are restricted. They could have been a hell of a lot clear about this.
NVM, only the 9 shares are restricted. Back to theory 1: this is just a screw up.
NVM, only the 9 shares are restricted. Back to theory 1: this is just a screw up.
This post was edited on 8/28/11 at 10:10 pm
Posted on 8/28/11 at 10:37 pm to RedStickBR
It makes me feel better that someone else finds that oddly worded.
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