In this article, I will be dissecting a REIT’s dividend yield so that an investor will have a better grasp when combing through the sector. This is not a recommendation to buy or sell any REIT in particular, but is intended to broaden your perspective when looking at REITs in general.
As the factors that shape a REIT’s dividend yield appear to be poorly understood by the average investor, I will be sharing my framework of decomposing a REIT’s dividend yields into simpler blocks for investors to understand. REITs, to a large extent, trade like junk (high yield) bonds, as institutional investors approach them as such. Under this paradigm, REITs are usually valued in terms of dividend yields, unlike common stocks. While REITs are also evaluated by their Price to NAV (P/NAV), it is usually a...This is the first part of my series in how to analyse REITs.
