Everybody is talking about oil stocks taking off, but when I look at my own industry heat chart, I see that real estate is currently the hottest stock market sector.
If you want to see my chart, visit bit.ly/Harrys_Hot_Sectors, select the bar chart display, and “Past Three Months” for the time frame.
Rather than buying entire office buildings or apartment complexes, you can participate in the real estate sector by buying real estate investment trusts or REITs.
Real estate investment trusts come in two categories, 1) property real estate investment trusts that own commercial real estate properties such as shopping centers, apartment complexes, industrial parks, etc. and 2) finance real estate investment trusts that hold mortgages secured by real estate.
Although they trade similar to regular stocks, real estate investment trusts are a special type of corporation. They don’t pay federal income taxes if they distribute at least 90% of their taxable income to shareholders.
That’s why many real estate investment trusts pay high dividends, often equating to 4% to 6% annual yields. Real estate investment trusts dividends are mostly taxed as regular income instead of the lower 15% or 20% capital gains rate. So it’s best to keep real estate investment trusts in tax-sheltered accounts.
Finviz stock screener
I used the free stock screener available on finviz.com to pinpoint real estate investment trusts worth considering. Here’s what you need to know to run your own…
