Real estate investment trusts (REITs) have been clobbered over the past year, as concerns over rising interest rates and a potential economic slowdown have weighed heavily on the sector. However, not all REITs are created equal, and there are still opportunities for investors to find value and income in this space.
One area of the REIT market that has held up relatively well is cell tower REITs, such as American Tower (NYSE:AMT). With the growth of 5G networks and the need for more cell towers to support them, these companies have a bright future ahead. Other REITs, such as Federal Realty Trust (NYSE:FRT) and Realty Income (NYSE:O), are priced right and pay consistent dividends, making them attractive options for income investors.
Despite the challenges facing the REIT sector, there are reasons to be optimistic. For one, REITs gained this week as the Senate approved the debt ceiling bill, enabling the country to avert its first-ever default. Additionally, many REITs have taken steps to position themselves for success, such as diversifying their portfolios and improving their balance sheets.
Of course, as with any investment, past performance is no guarantee of future results. In any stock, exchange-traded fund (ETF), or mutual fund prospectus, an investor is likely to come across the phrase "past performance is no guarantee of future results." This is certainly true for REITs, which have been known to experience significant volatility.
One example of this volatility is Armour Residential REIT (NYSE:ARR), which saw a +1.99% move in its stock price in the latest trading session. While this may seem like a positive development, it's important to remember that REITs can be highly sensitive to market fluctuations and investor sentiment.
For investors looking to add REITs to their portfolio, it's important to do their due diligence and choose wisely. The best REITs to buy for income and growth provide both solid, consistent dividend payments and reliable returns. Urstadt Biddle Properties (UBA) is one such REIT, with a diversified portfolio of retail, office, and industrial properties.
While the REIT sector has faced its fair share of challenges in recent months, there are reasons to be optimistic about its future. While some REITs may struggle, others will thrive, and the overall health of the sector will likely remain strong. While it may be tempting to jump ship during times of uncertainty, staying the course and investing for the long term is often the best strategy.
In the end, while I hate to see the REIT sector shrink, it is likely that many REITs will become suitors, which is a sign of a healthy sector. This consolidation may lead to a stronger and more resilient REIT market in the years to come.
