Investors should think twice about REITs: Wall Street Journal

While real estate investment trusts offer relatively juicy returns, the market may be getting overheated, and investors should think twice about which REITs they invest in, a columnist in the Wall Street Journal argued.

REITs have had a great year — the MSCI U.S. REIT index has gained 30 percent since last October, the Journal said — likely due to the fact that yields on other investments are low, with REITs yielding about the same as corporate bonds. And while REITs offer the same yield — 3.4 percent — they offer higher dividends in the long term, as rents will likely rise, the Journal said.

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Nonetheless, as investors have gravitated towards residential REITs, the market has gotten frothy, the Journal said. A more prudent investment would be investing in an REIT that owns industrial properties — a less sexy, but more predictable asset class. [WSJ] – Guelda Voien