A Swiss police sniper stands guard on the roof next to the Congress centre during the first day of the World Economic Forum, on January 17, 2017 in Davos. / AFP PHOTO / FABRICE COFFRINI (Photo credit should read FABRICE COFFRINI/AFP/Getty Images)
Excerpts from this article appeared in the September edition of the Forbes Real Estate Investor (newsletter subscription service).
In the late 1920s, Albert Einstein was a regular visitor to the Alpine town of Davos, located on the river Landwasser, in the Rhaetian Alps, between the Plessur and Albula Range. In 1928, Einsten gave a lecture on relativity, and began by telling his audience:
“This enterprise is admirably suited to establish relations between individuals of different nationalities, relations that help to strengthen the idea of a European community.”
Davos also has a rich cultural history. Robert Louis Stevenson wrote the final chapters of Treasure Island in Davos in the early 1880s. Sir Arthur Conan Doyle wrote short stories and articles there in the early 1890s, helping to popularise skiing and tobogganing. Thomas Mann’s influential novel The Magic Mountain was set in Davos, just before WW1. After the war, the expressionist painter Ernst Ludwig Kirchner lived in Davos from 1918 until his death in 1938. (*)
What does ‘DAVOS’ have to do with REIT investing?
I’m sure that you are familiar with the acronym FANG created by CNBC’s Jim Cramer a few years ago. It’s representative of four of the most popular and best-performing tech stocks in recent memory - Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Google (NASDAQ:GOOG) (NASDAQ:GOOGL).
And I thought to myself, wouldn’t it be cool to create my very own REIT version of FANG? Not just to showcase some flashy acronym like SWAN (stands for “sleep well at night”), but to create a benchmark of the best REIT performers in one easy-to-use phrase.
So recently I decided to spend a few days carefully vetting the best REITs to own and then map out a catchy 5-letter acronym that anyone can recite.
To screen out the best REITs, I first went to my REIT Lab to select the top SWANs and then I picked the best dividend growers in each property sector. Obviously I did not pick all of the property sectors, I only selected the REITs with the overall best dividend growth patterns – past, present, and future.
As you can see, American Tower (AMT) and Digital Realty (DLR) have performed extremely well year-to-date, while the two retail-focused REITs, Simon Property Group (SPG) and Realty Income (O) have under-performed the ‘DAVOS’ peers.
Source: FAST Graphs
I hand-picked the ‘DAVOS’ REITs because of their solid fundamentals and dividend growth record. I believe that these 5 REITs will collectively outperform over the next 1-3- and 5 years due to their strong dividend growth profile. Here’s a snapshot of the FFO/share forecast for these 5 REITs:
Source: FAST Graphs
In the future, I will be referring to the ‘DAVOS’ and comparing the performance with the other REIT portfolios in the newsletter. I consider these REITs to be proxies for dividend growth and that should be reflected in future performance and results.
Davos is the largest ski resort in Switzerland and the highest city in Europe. Perhaps there’s some irony to the fact that I used ‘DAVOS’ as my best-in-class REIT picks and time will tell if the portfolio returns are comparable to the name I selected as the highest city in Europe.
I owns shares in DLR, VTR, O, and SPG.