3 REITs Increasing Dividends in April

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3 REITs Increasing Dividends in April


With a pending interest rate increase from the Fed, I have been receiving questions on whether REIT values will be hurt by rising interest rates. It is a widely held – but inaccurate – belief that REIT values must fall if interest rates continue to increase. The fact that many REITs increase their dividends over time tells us that these are businesses with the potential for growing dividends and share values even in a rising rate environment.

Recently, I read an article that looked at the history of REIT values and interest rates. Since 1995, there has been 15 periods of significantly rising interest rates. Out of those 15, REIT values increased 12, or 75% of the time. In the period from June 2004 through August 2006 the Fed increased rates 16 times. During that period REITs outperformed the S&P 500, 59% to 22%.

The fact is that REIT results are driven more by economic conditions, rising commercial real estate values, and the ability of REITs to increase the rental rates on their properties. We can monitor how well a REIT is performing from its history of dividend growth. Most REITs announce any dividend increases once a year, in the same month each year.


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