No Arguments With Mr. Market: Preferred Apartment Up 109%

Upon first glance, APTS may appear to be just as the company’s name suggests – “preferred apartments.” But upon closer inspection, the most compelling differentiator for the company is its sustainable dividend growth. Since going public (March 31, 2011) APTS has grown its annual dividend by ~14.8%.

Summary

  • 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.

Preferred Apartment Communities: A Classic Small-Cap Pick

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