Why Not High Yields Right Now
All of the financial experts seem to be saying that the current high yields of REITs are in danger of being cut. For some REITs the experts are right. We've already seen such a cut with General Growth Properties. General Growth actually suspended their dividend for the remainder of the year. However, even before the current recession the regional mall business was struggling. Months ago we witnessed Starbucks close several of their stores in regional malls like those owned by General Growth.
Let's keep dividend yield in perspective. For example drug giant Pfizer yields a utility-like 7.6%. AT&T yields 6.3%. Verizon pays 6.8%, General Electric 6.3% and so on. So a Duke Realty yield of 12% doesn't seem ridiculous in comparison. While Strategic Hotels and Resorts’ current yield of 23% is probably out of whack, is that because the company is shaky or because the stock is simply over sold?
I believe that REITs backed by solid assets that can also manage their debt obligations represent buying opportunities. Stay tuned.
Share It: 
Bookmark It: 
Oct.20.2008. 17:07
Confused on Oct.21.2008. 17:08
Well, I see that Kerkorian is selling his shares in Ford to take advantage of the values in Gambling and Hotels. So, regarding Strategic Hotels, I would have to say it is simply over sold. The bigger question is "is Gates going to buy it out and at what price. I say $12 which three years from now will look like a steal.
* = required field