- Why own small-cap REITs?
- There's a better chance that small-cap REITs will have lower valuations that result in an underestimation of a company's operational health and prospects for growth.
- I’ll take 109% returns ANY DAY of the WEEK!
Today I’m publishing the September edition of the Forbes Real Estate Investornewsletter. As usual, I have packed the monthly newsletter with over 25 pages of thought-provoking content, including five different REIT portfolios.
My introductory article in the newsletter this month is on the all-new ‘DAVOS’ portfolio, a.k.a. the “Fab Five” REIT portfolio that includes a diversified basket of some of the best dividend growers within the REIT universe.
Another favorite portfolio in the monthly newsletter is the Small-Cap REIT Portfolio, a collection of 18 Equity REITs generating a weighted average dividend yield of 5.5%.
Why own small-cap REITs?
The trade-off for investing in large-cap, more traditional REITs can be easily traced back to the institutional buyers, led by exchange-traded funds and mutual funds that have a higher degree of analyst coverage and much lower risk tolerance.
Conversely, the small-cap REITs lack the same Wall Street coverage and investor interest which can result in shares remaining undervalued, especially in down markets for extended periods of time.
So, these under-analyzed small-cap REITs flying under the radar can offer better potential for growth over the long term. Due to decreased institutional support, there's a better chance that small-cap REITs will have lower valuations that result in an underestimation of a company's operational health and prospects for growth.
Collectively, small-cap REITs have always been viewed as more risky bets than large-caps, and although they don't have the diverse revenue streams or stable cash flows as the big boys, they are complementary to my overall dividend growth model.
Today, I am going to tell you about one of my top small-cap REIT performers, not only this year but since I began covering the company back in December 2014.