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I think that this is a historic opportunity because interest rates are likely headed back lower in the near term.I think that this will push a lot of that same capital that left REITs right back into them and this will then lead to an epic recovery.
Many REITs could easily surge by 50-100% as interest rates begin to trend lower, and that's on top of the cash flow yield and the growth. Many high-quality REITs now offer 6-8% dividend yields and are set to grow their cash flow by 3-5% over the long run.
6-8% dividend yield + 3-5% annual growth + 50% upside from multiple expansion over 10 years = 15-20% annual total returns
Today, REIT valuations are back to the 2020 crash levels,but did not crash because of poor fundamentals.
Investors could suddenly earn a decent yield from fixed income, and that caused a major capital to shift from REITs to fixed income, irrespective of their strong fundamentals.The proof of this is that allocations to REITs are today at their lowest level since the great financial crisis.
REIT balance sheets were actually the strongest . Leverage is low, maturities are long, and the high inflation led to rapidly growing rents, cash flows, and dividend payments.
this is a historic opportunity because interest rates are likely headed back lower in the near term.this will push a lot of that same capital that left REITs right back into them and this will then lead to an epic recovery.
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