This Investment's A Little Strange
The Dynamic Wealth Report
April 13, 2010
More than two decades ago, my grandfather started teaching me about the
stock market. I remember looking at a copy of the Wall Street Journal. I
was amazed at all the stocks you could buy.
I devoured that newspaper like I hadn’t eaten in months.
I read every article twice and asked countless questions. I was hooked
on the markets. Reading that paper, I uncovered a number of interesting
things. I realized the market includes a lot more than stocks.
You can buy bonds, commodities, options, and currencies (just to name a
few). I had to know more about these other types of investments. Over
the years, I’ve learned about many different investment types. One that’s
always held an interest for me is Real Estate Investment Trusts or
REITs.
Recently I found a unique investment in the REIT industry.
But first, what is a REIT?
-------------Sponsor-------------
Where Can You Turn $300 Into $1.3 Million Right Now?
Our own small-company specialist, Robert Morris, has found a
way to 'sniff out' tiny penny stocks on the verge of a major breakout. And
the timing for this has never been better.
You see, the system takes advantage of an obscure SEC regulation that
sends penny stock prices through the roof.
We've seen some stocks gain 852%... 5,450%... even 17,496% in no time
flat.
Click here
for the details...
-----------------------------------
REITs might seem complicated… but at their heart, they’re really simple.
A REIT is essentially a company with a special tax designation (I’ll get
to that in a moment). The REIT raises money and goes out and buys real
estate.
The REIT operates the property. They’ll handle everything from leasing
space to collecting rent and paying operating expenses.
Most of the profits are sent to the REIT shareholders as dividends. This
is where the special tax designation comes in. To operate as a REIT, the
company must pay out at least 95% of their profits to investors every
year.
In exchange, the company doesn’t have to pay taxes on earnings.
That tax savings is huge… and it gets passed along to investors.
Now, you’ll realize REITs are a tad bit more complicated… but in a
nutshell, that’s how they work.
So why would you want to buy a REIT?
I can think of several reasons.
First, it gives you great exposure to real estate. You can own a piece of
the local mall or hotel. Something you might not normally be able to
afford on your own. You also avoid having to deal with tenants, leases,
collecting rent checks, or repairing leaky toilets.
Second, REITs usually have robust dividend yields.
Remember, REITs distribute a big chunk of their earnings back to
shareholders. If you’re looking for a steady stream of cash flow, REITs
are often a good source.
Third is appreciation.
Successful REITs are investing in real estate that’s going up in value. The longer they hold their real estate, the greater their value. As the
value of the real estate goes up, the value of your shares should go up
as well.
As you can see, REITs provide exposure to real estate, offer a nice
dividend, and have the potential to appreciate in value.
You can buy all different types of REITs. Some focus on apartment
complexes, others buy warehouses and industrial property, and some even
buy hospitals. REITs often specialize in the types of real estate
they’re buying.
I recently uncovered a most interesting REIT.
This REIT owns movie theaters!
Entertainment Properties Trust (EPR) goes out and buys the real estate
behind huge movie complexes. They own 80 different theaters throughout the
country. The space is rented to companies like AMC Lowes and Regal
Cinemas. You’ve probably seen a movie in one of their theatres.
Talk about a great business.
The company regularly boasts they’ve never had a late payment or vacancy
in their 13 year history!
Now they aren’t perfect. They tried to expand outside the movie business
into water parks, wineries, and resort development. Management’s exiting
some of these deals so they can stick to their knitting – movie
theaters.
Despite the misstep, the company is thriving. EPR stock has doubled in
the last year. And growing movie attendance should keep pushing it even
higher.
They have a $1.8 billion market cap and the company recently paid a
$0.65 quarterly dividend. That’s about $2.60 per share a year or a yield
of just over 6%. Not bad when the best you can get at the bank is a sad
0.5%.
Take a look at this unusual REIT. EPR is different than all the others,
but they could provide big returns to shareholders.
Despite the strong market moving higher, some IPOs are struggling. Most
notably, the shippers. Three went public in the last few months and now
they’re trading under their IPO price. It’s not a good sign for the
market. We’d expect the tanker stocks to be one of the bigger
beneficiaries of an economic rebound.
Print
Page
Bookmark Us
Home | Whitelist Us |
Terms of Use |
Privacy Policy |
Contact Us | Security |
Site Map