Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Real Estate Investment Trusts: Still a Smart Investment?

Investments that produce income are hot right now, and real estate investment trusts in particular have high yields and tax advantages. But are REITs still a smart investment right now?

In the following video, Dan Caplinger, the Fool's director of investment planning, looks at whether REITs are still a tax-smart choice for investors. Dan notes that mortgage REITs Annaly Capital (NYSE: NLY  ) and American Capital Agency (NASDAQ: AGNC  ) have dominated investors' attention in the REIT space for years, given their double-digit yields. But as interest rates have started to rise, shares of Annaly and American Capital Agency have dropped, raising questions about REITs generally. Dan goes on to observe, though, that other REITs with actual real-estate holdings rather than just the mortgage-backed securities that Annaly and American Capital own could have better growth prospects. He points to Simon Property Group (NYSE: SPG  ) and Public Storage (NYSE: PSA  ) as two REITs with different types of exposure to real estate. In addition, the Vanguard REIT ETF (NYSEMKT: VNQ  ) is just one way you can get exposure to a broader selection of real estate investment trusts.

Dan concludes with a discussion of the tax advantages of real estate investment trusts, with REITs not having to pay corporate tax. However, most REITs don't qualify for favored dividend-tax status, costing investors more on the dividends they receive than on dividends from regular stocks. In the end, Dan concludes that favorable trends in the real-estate market will probably be the key driver of growth for REITs in the future.

Make your portfolio tax-smarter
You have to defend yourself from higher taxes, especially in light of tax increases earlier this year that affected nearly every American taxpayer. With the right planning, you can take control of your taxes and potentially even lower your tax bill. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2670147, ~/Articles/ArticleHandler.aspx, 10/25/2016 3:29:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,167.04 -55.99 -0.31%
S&P 500 2,142.71 -8.62 -0.40%
NASD 5,279.51 -30.31 -0.57%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 3:13 PM
AGNC $20.24 Up +0.40 +2.02%
American Capital A… CAPS Rating: ***
NLY $10.36 Up +0.19 +1.87%
Annaly Capital Man… CAPS Rating: ****
PSA $212.17 Up +0.67 +0.32%
Public Storage CAPS Rating: ***
SPG $197.41 Up +0.40 +0.20%
Simon Property Gro… CAPS Rating: **
VNQ $83.58 Down -0.08 -0.10%
Vanguard REIT ETF CAPS Rating: ****