Friday, October 31, 2014

I Am Buying These REITs For Dividend Income

by Roger on January 9, 2013

Putting Your Money To Work

investing-money-wisely-for-income

Hit The Target With These REITs

Income investing is near and dear to my wallet and therefore, my heart. That’s one reason I was excited about the new Yield Shark newsletter from Mauldin Economics that debuted last Summer.

Unfortunately for subscribers like myself with zero earning cash to deploy now, Yield Shark has gotten a fairly slow start and has less than half of its theoretical $100,000 portfolio deployed.

The reason has been a measured approach, typically with only 1 new recommendation per month. The last 2 months running, the recommended stock has not traded down to the recommended price. I understand buying right, but there have to be other options.

REITs Recommended By Brad Thomas at Seeking Alpha

Brad Thomas over at Seeking Alpha has done a fantastic job covering the REIT space. Picking among the REITs he has found attractive – I am NOT going to pick American Towers yielding around 1.5% and HOPE for capital gain after a spectacular year – I did find some healthcare related REITs that dropped to my buy price limit yesterday.

The first is HealthCare Trust of America (Symbol: HTA) which I picked up for $10 per share, yielding around 5.7%. It’s a new issue just last year in the right sector at the right time.

The second is Omega HealthCare Investors (Symbol: OHI) which traded down to my limit of $24.60 yesterday. It yields about 7.1%, which is almost a concern to me because it’s on the high side, but the stock has been performing pretty well and if that continues the yield will decrease. This REIT is primarily into nursing homes which seems like a good sector with aging boomers who have few children willing to take them in.

Motley Fool has also written positively about OHI just the other day – here.

Sound Investing Advice

Never, ever buy an investment just because you have money “burning a hole in your pocket” because you feel – at 0% interest – it needs to be deployed.

Nevertheless, sound research seems to have been done on these two REITs among many, many others that are probably good candidates for a fixed income portfolio too.

With Yield Shark’s December Issue, the primary recommendation is now trading around 6.3% above the recommended entry price. The “bonus”, unofficial recommendation that was in that issue is up 10% since the date of the release, currently over 21% above the recommended buy price.

IF, and that’s a big IF, the market continues to do well the first part of this year, the time to buy is now – not when the market turns down and it may really be time to SELL.

Which brings up another point!

While I like using limit orders to buy stocks at my price, always beware that sometimes those limits are hit after the release of BAD NEWS that is taking the stock MUCH LOWER. So either be quick to enter a stop loss (imperfect) or at least be paying attention.

You want to buy stocks using limit orders only when you are buying at the low side of their current, normal trading range NOT below that trading range. Sure, it might be a gift, but it also might be the start of catching a falling knife.

Note: This is NOT a recommendation to BUY or SELL any investment; we NEVER do that.

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