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Make Money in Growing Realty Stocks the Easy Way

By Selena Maranjian – Updated Apr 6, 2017 at 4:22PM

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There's no need to guess which company will perform best.

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the real estate market to thrive when the economy eventually and inevitably recovers, the iShares Cohen & Steers Realty Majors ETF (NYSE: ICF) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.35%.

This ETF has performed reasonably well, beating the S&P 500 over the past 10 years but lagging it over the past five. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

With a low turnover rate of 9%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Several of this ETF's components made strong contributions to its performance this year. Health Care REIT (NYSE: HCN), up 8% in 2011, is attracting investors with its focus on properties such as residential care facilities and doctors' offices, which should see much demand as our population ages. (Health Care REIT has been named one of the 10 highest-rated REITs, along with the likes of RAIT Financial Trust (NYSE: RAS) and others.) HCP (NYSE: HCP), another health-care REIT, gained 8%. It's a dividend powerhouse, among other things, paying more than a 5% yield and regularly raising its payout.

Other companies didn't add to the ETF's returns this year but could have an effect in the years to come. General Growth Properties (NYSE: GGP), down 11%, is a company that has emerged from bankruptcy protection with restructured debt and, like gypsum giant USG (NYSE: USG), may be among the small subset of bankruptcy-declarers that makes investors wealthier.

The big picture
Demand for real estate isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Learn about the best dividend ETFs. And if you're looking for some great investments beyond ETFs, consider these 10 stocks for your retirement portfolio.

Longtime Fool contributor Selena Maranjian holds no position in any company mentioned. Click here to see her holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Health Care REIT. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

HCP, Inc. Stock Quote
HCP, Inc.
PEAK
$24.28 (-1.10%) $0.27
Welltower Inc. Stock Quote
Welltower Inc.
WELL
$66.71 (-2.26%) $-1.54
Brookfield Property REIT Inc. Stock Quote
Brookfield Property REIT Inc.
GGP
USG Corporation Stock Quote
USG Corporation
USG

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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