Best Diversified REIT Stocks Right Now • Daily Update • Benzinga

Have you ever dreamed of investing in a theme park, apartment complex or hospital? A diversified share of a real estate investment trust (REIT) can allow you to invest in multi-million dollar companies for less than $40 per share. Diversified REIT stocks give you a higher level of protection by exposing you to multiple real estate markets or companies with a single purchase.

Which REITs are worth your money and how do you know which REITs will continue to pay high dividends? Today, we’ll cover the basics of REIT dividend investing. We’ll also introduce you to some diversified REIT stocks that are currently making investors talk.

Overview: Diversified REIT Stocks

An investment trust such as a REIT is a special classification of companies that invest in real estate and real estate assets. To qualify as a REIT, a company must invest at least 75% of its assets in real estate assets. It must also agree to return at least 90% of its taxable income to its shareholders in the form of dividends. In exchange for compliance with the REIT classification, the company benefits from generous tax advantages.

A diversified REIT is a REIT that invests in more than one type of property. A diversified REIT may invest a portion of its capital in commercial space, residential real estate, healthcare properties and more. Some REITs may also diversify by location, such as buying commercial properties in multiple cities across the country. Each diversified REIT allocates its resources with its own unique distribution.

Investing in diversified REITs is a great way to take advantage of the higher dividends on offer without putting all of your financial eggs into one real estate sector.

Real estate investment brokers

As with investing in any other type of stock, you will need to open an account with an online broker before you can start buying diversified REIT stocks. Here are some of our favorite brokers offering online market access and low cost trading.

Features To Look For In A Diversified Stock REIT

There are dozens of diversified REIT stocks in major US markets. Unfortunately, not all REITs are worth investing in. Let’s look at some key features you should look for before investing.

  • High earnings per share: One of the first factors to consider when comparing diversified REITs is the earnings per share (EPS) of each offering. A higher EPS means that Silver is managing its finances well and has more money from its properties than it spends on maintenance and upkeep.
  • A solid diversification strategy: Each diversified REIT stock has its own definition of what “diversification” means. Some REITs diversify by investing in multiple types of properties. Some diversify by investing in multiple states or cities and some REITs diversify by investing in different parts of a singular city (common in large cities like New York and Los Angeles). Some large REITs use these 3 diversification strategies.

Before investing in a REIT, review its portfolio to ensure that it has a sufficiently high level of diversification to mitigate risk. If you are considering investing in a single diversified stock REIT, make sure it has multiple levels of diversification.

  • An appropriate dividend yield: Most investors are attracted to REITs because they pay above-average dividends. With so many sub-$10 stocks in the REIT sector, it can be tempting to invest only in those that pay the most dividends. However, high dividends are not always the benchmark for a successful REIT.

Instead of looking at the amount of dividend per dollar, look at the dividend yield of each stock. Dividend yield is a ratio that compares the price of a stock to the amount it pays out in dividends.

REITs tend to have higher dividend yields, but be aware that high dividend yields can be a trap to attract investors before suddenly lowering the dividend. As a general rule, you should be wary of stocks that have dividend yields above 10%.

Diversify your real estate portfolio

Diversified REIT stocks can add a level of security to any portfolio. If you want to add even more diversification to your real estate investments, also consider purchasing a REIT exchange-traded fund (ETF). REIT ETFs aggregate multiple REITs into an individual sector, giving you more diversification without buying individual stocks.

Whatever you decide to invest in, remember to do your research and keep an eye on how your portfolio is doing.

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