When REITs (Real Estate Investment Trusts) were first introduced a few years ago, it provided a yield of more than 6%. The yield later dropped to 4%, giving an appreciation of more than 50% in the price of the REIT. The dividend payout also increased, due to higher rental income. This led to a further gain in the REIT.
The price of many REITS have dropped by more than 20% from its recent peak. It is now possible to find a few REITS that yield more than 5%. This is an attractive yield.
If there is an economic slowdown, there is the risk that rental income may drop in the future, and reduce the yield on the REIT. This risk is worth taking. Even if the rental income drops by 20%, the REIT will still be able to give a yield of more than 4%.
I have decided to invest in REITS at this time. (Previously, I found the price to be too high).
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