investing

4 investments with higher yields and risk

Real estate investment trusts
Real estate investment trusts © JuliusKielaitis/Shutterstock.com

Real estate investment trusts, or REITs, are required to distribute at least 90 percent of their taxable income to unit holders. As with MLPs, a portion of the dividends may be a return of capital.

Also like MLPs, REITs borrow money to invest. But REITs invest in real estate instead of energy. This means they are sensitive to declines in the real estate market as well as rising interest rates.

"In 2013, a number of REITs, especially those focused on mortgages, fell in value as the 10-year Treasury rose," says Ben Marks, chief investment officer of Marks Group Wealth Management.

REITs fall broadly into two categories: Some buy, hold and manage a portfolio of properties, such as shopping malls or apartment complexes. Others focus on buying and selling mortgages in the secondary mortgage market. "We avoid the mortgage REITs altogether and look for those that own higher-quality properties, because they are less correlated to interest rates," says Marks.

A number of REITs offer dividends in excess of 6 percent, and some dividend yields go as high as 15 percent. However, the highest dividend yields may be due for a fall. "A number of REITs have lowered their dividends over the past couple of years, because their net investment income has fallen radically as their borrowing costs have gone up," says Ghosh. "Again, dividend payout history is important."

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

Should lucky gambler play the market?

Dear Dr. Don, I recently got lucky at a casino and won $8,000. I have a car loan and carry balances on my credit cards, but I never miss a payment. I don't want to blow all the winnings by paying down unpaid debt for my... Read more

advertisement

Blog

Sheyna Steiner

A year-end pothole for fund investors

Holding actively managed funds in a taxable account can lead to a higher tax bill, thanks to the capital gains distributions being made right about now.  ... Read more

Partner Center
advertisement

Connect with us