Tag Archives: investment

50 Real Estate Companies Increased Their Dividends By More Than 10% In 2015

Despite the modest pressure on REIT stocks in 2015 amid concerns regarding potentially higher interest rates, investors put $1.7 billion of fresh money into REIT ETFs, according to SSGA data. S&P Capital IQ thinks one of the appeals of a diversified approach to investing in REITS is their different asset class categories to mitigate risk in any one area of real estate and high cash flows to support dividends. During 2015, a wide array of REITs increased their dividends. The outlook for continued dividend increases in 2016 looks favorable to S&P Capital IQ aided by strong fundamentals. According to SNL Financial, 140 North American real estate companies, 118 of those based in the U.S., boosted their dividend last year, two more than did in 2014. Indeed, 50 of these companies hiked dividends by 10% of higher and in certain cases, the growth was much stronger . According to Christopher Hudgins of SNL, the largest increase last year was Ashford Hospitality Prime (NYSE: AHP ). The small-cap hotel and resort REIT doubled its dividend in June 2015 and ended the year with a $0.40 per share annual dividend (3.8% current yield). While such dividend growth should be providing some downside protection, AHP shares have been particularly volatile in recent months. Jake Mooney of SNL noted in early January that a significant investor in AHP called for a sale of the company in light of its discount to net asset value. But some investors in large-cap REITs also received double-digit increases to cash payments last year. For example, Public Storage (NYSE: PSA ), a specialized REIT, raised its dividend 21% in April 2015; PSA has a $43 billion market capitalization that grew during 2015 as the shares rose. PSA ended the year with a $6.80 per share annual dividend (2.7% yield). S&P Capital IQ noted that third quarter 2015 (latest available) occupancy rate at 95% and rent-per-square-foot growth was ahead of its peers. Funds from operation (FFO) are projected to rise 9% in 2016 according to S&P Capital IQ, providing ample room for a dividend increase. Another large-cap REIT with double-digit dividend growth is Prologis (NYSE: PLD ). In April 2015, the industrial REIT raised its dividend 11% to a $1.60 per share annual dividend (3.9% yield). S&P Capital IQ estimate 2015 FFO per share of $2.21 expanding 9.5% to $2.42 in 2016, driven by strong rate increases and the benefits of industrial property owner KTR Capital Partners transaction. S&P Capital IQ has a buy recommendation on PLD and sees the deal providing increased exposure to high quality e-commerce tenants. Despite net inflows during 2015, investors did not treat all REIT ETFs equally. Vanguard REIT Index (NYSEARCA: VNQ ), the largest ETF within the investment style with $27 billion, gathered $1.1 billion of fresh money according to etf.com data. Not that far behind with $674 million in inflows was Schwab US REIT (NYSEARCA: SCHH ), even though the ETF had a smaller $1.9 billion asset base. In contrast, iShares US Real Estate (NYSEARCA: IYR ) had $1.0 billion in outflows and now has $4.6 billion in assets. Meanwhile, Simon Property Group (NYSE: SPG ) raised its dividend 3% in 2015. S&P Capital IQ has a Buy recommendation on these shares and forecasts FFO to increase 8% in 2016 driven by improving retailer demand. With a 0.43% expense ratio IYR was at least three times more expensive than VNQ and SCHH. However, with 3.9% dividend yields, IYR and VNQ both had higher income appeal than SCHH’s 2.5% yield. We think investors seeking dividend income should look at IYR, SCHH and VNQ since they provide exposure to REITs that are positioned for future dividend growth. Additional disclosure: Please see disclosures http://t.co/AHwSBhyHHt

How Tactical Asset Allocation Can Handle Market Corrections

By Matthew Tuttle , Tuttle Tactical Management First published to the Harvest Exchange on January 7th, 2016 I have been writing a lot lately about the new market environment and its implications for Tactical Asset Allocation. Now that it looks like we are back in a market correction this article will go into more detail about how to handle these types of moves. In the past any type of tactical methodology could successfully navigate a market correction. Corrections gave plenty of warning before the majority of the decline and before the majority of the recovery. In this new market environment, corrections give little, if any warning, making navigating them much harder than ever before. If practitioners implement the following steps then market corrections can be an opportunity rather than something to be dreaded: 1. Use multiple tactical methodologies. No one methodology works well in every market environment. Instead of trying to find the one “best” methodology, multiple, uncorrelated, methodologies should be combined. 2. Use some sort of optimization and/or regime switching approach to be able to move to the methodologies that are particularly suited to the present market environment. 3. The approach should take volatility into account so that you can increase risk when market volatility is decreasing and reduce risk when it is rising. 4. Emphasize counter trend models over trend following and fundamental. Counter trend models which seek to buy into short term weakness and sell into short term strength can offer better risk adjusted returns than other types of models. They also typically do this with much less time in the market than other methodologies. 5. Ladder your counter trend methodologies. During a correction markets can get very oversold and very overbought. Counter trend methodologies should be laddered just like a bond portfolio might be laddered so that they scale into and out of markets. 6. Use conditional filters. Looked at over a large period of time it may seem as if the performance of different methodologies is fairly uniform. However, when time frames are reduced you may find that a model has much better success with long trades when the underlying security is above a certain moving average, or corporate earnings are increasing, etc. These types of things can be used to filter trades and reduce risk. 7. Use a short side. You may not be comfortable being net short the market but using models that have the ability to short can offset the risk of models that may be long during a correction. 8. Incorporate extremely short term momentum models. Over long periods of time, extremely short term momentum models will not work well. However, they can navigate a correction very well, getting out near the top and back in near the bottom. If you apply an optimization or regime switching approach you can be allocated to these models when the environment is conducive and out of them when it is not. 9. Eliminate as much of the rebalance date risk you can. Because corrections are so sharp and come so quickly rebalancing a portfolio on one fixed date could bring a lot of extra risk. Instead of rebalancing portfolios on one fixed date they can be tranched. For example, a strategy that rebalances weekly on Mondays could be changed where 20% of the portfolio is rebalanced on a daily basis. Incorporating these steps will help tactical strategies successfully navigate corrections in this new market environment.