iREIT Daily

Inflation Continues Its Climb – But So Do Dividends! (And the Musk Drama Continues Too)

Brad Thomas

467 postsJuly 13, 2022

Let’s first face the inflationary facts, painful though they most definitely are:

Economists expected inflation in June to rise 8.8% year-over-year, an already unacceptable number.
Instead, it came in at 9.1%, even worse than May’s 40-year high of 8.6%.
Month-over-month, inflation ticked up 1.3%, also worse than economist expectations of 1.1%.
“Core CPI,” which excludes the very elements hurting consumers so much right now (i.e., food and energy) rose 5.9%.

And here’s one conclusion: The Fed will probably raise interest rates by 75 basis points next month.

Yet even in the face of that economic devastation, one aspect of the equities game seems fully unaffected. By that, I mean dividends have been climbing steadily in the last decade… and just hit a new record despite everything.

Let’s turn to The Wall Street Journal as usual:

“The companies in the S&P 500 paid out a record $140.6 billion in dividends in the most recent quarter, according to S&P Dow Jones Indices. That’s up from $137.6 billion in the first three months of the year and $123.4 billion in the same quarter last year.
“Annual dividend payouts have notched new highs every year for a decade, excluding a slight decrease in 2020. Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said he expects dividends to set new records in the current quarter and for the year as well.”

Moreover, some estimates indicate 2022 may see a more-than-10% jump in payments from last year’s record $511.2 billion. This would mark the first increase of its kind since the Obama era.

Corporations that pass profits to shareholders usually feature robust revenues from industries like utilities, telecommunications, and – of course – real estate investment trusts (REITs). As such, consumers can usually rely on them no matter the economic circumstances.

I’ve long said that safe high-yield assets are some of the best ways to fight inflation. And in light of today’s latest report, that’s a story I’m sticking to – both in writing and in practice.

More Non-REIT News to Know About

I’ve admitted before that I find Elon Musk to be an entertaining figure. That’s why I’ve covered him before more than once: because of that amusement factor.

And these days – even though I have nothing to do with Twitter (TWTR) and no plans to change that association, or lack thereof – the drama is just too good to pass up.

By now, most of us know Musk officially revoked his offer to purchase the social media platform for $44 billion. Essentially, he accused it of fraud at worst and unacceptable levels of ignorance at best concerning the accuracy of its user count.

In response, Twitter threatened to take legal action if he didn’t proceed as initially planned. It sent Musk an official letter calling his declaration “invalid and wrongful,” adding:

“Twitter has breached none of its obligations under the agreement, and Twitter has not suffered and is not likely to suffer a company material adverse effect.”

Its legal team also stated that the agreement is not, in fact, terminated; the bank and equity commitments remain in effect; and Musk must obey his obligations. As such:

“As it has done, Twitter will continue to provide information reasonably requested by Mr. Musk under the agreement and to diligently take all measures required to close the transaction.”

How will it all turn out?

I have no idea, but you’d better believe I’ve got my popcorn in hand!

The World According to REITs

When we talk about record dividends like the ones we opened with, you know what I’m going to say…

One of the best places to look is in the REIT market.

Since REITs have to pass along most of their profits, they’re excellent ways to pad your portfolio against economic uncertainty. Knowing that, I want to focus on one particularly promising landlord today: Innovative Industrial Properties (IIP).

The company – which specializes in leasing industrial space to medical marijuana operators – is one of the best examples of dividend growth on the market today.

The stock, for its part, skyrocketed last year as one of the hottest REITs around. We’ve profited off that price before but, again, that’s not the only thing to like about it.

Today, its dividend return is just over 5%. But shortly after its IPO, that figure was 3.3%. In just a few years, this REIT has seen 12 dividend increases in the past few years.

That’s driven a 23% return on investment (ROI) for initial investors.

Now, here’s a very important note of caution: Shares peaked last year at $281. Since then, they’ve crashed to about $114 at last check. That’s why we consider it to be a Speculative Buy.

But for those who are in a good position to take on a bit of risk – with “a bit” meaning a smaller allocation than normal – opening a position at these prices could yield something stellar all over again.

Author’s Note: If you do determine this stock is right for you, make sure to purchase it at a smart entry point. Even the best of companies can burn you badly by buying in at inflated prices.

Happy Investing

Brad Thomas

467 posts

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Brad Thomas is Senior Research Analyst at iREIT and CEO of Wide Moat Research LLC. With over 30 years of real estate experience, he is also long-time Editor of Forbes Real Estate Investor, a monthly subscription-based newsletter that dives deep into the vast world of profitable properties, and since 2021, he has served as an adjunct professor at New York University.

Thomas has also been featured on or in Forbes magazine, Kiplinger's, U.S. News and World Report, Money, NPR, Institutional Investor, GlobeStreet, CNN, Newsmax, and Fox. And he was the #1 contributing analyst on Seeking Alpha in 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021 based on both page views and number of followers.

Thomas is the recently-published author of The Intelligent REIT Investor Guide (2021), co-author of The Intelligent REIT Investor (2016), and he wrote The Trump Factor: Unlocking The Secrets Behind The Trump Empire (2016) - all available on Amazon.

Thomas received a bachelor of science in business/economics from Presbyterian College and is married with five wonderful kids.

Yes, Inflation Is Really That Bad

REIT Mutual Fund	Symbol
Alpine Realty Income and Growth Fund	AIGYX, AIAGX
American Century Real Estate Fund	REAIX, REACX, AREEX, AREWX, ARYCX, AREDX
Real Estate Securities Fund	MRESX
AR Capital Real Estate Income Fund	ARIAX, ARICX, ARIPX
AssetMark Real Estate Securities Fund	AFREX
Aston/Harrison Street Real Estate Fund	AARIX, ARFCX
Baron Real Estate Fund	BREIX, BREFX
BlackRock Real Estate Securities	BIREX, BAREX, BCREX
Brookfield U.S. Listed Real Estate Fund	BRUAX, BRUCX, BRUIX, BRUYX
CGM Realty Fund	CGMRX
West Loop Realty Fund	REIIX, REIAX, REICX
Cohen & Steers Institutional Realty Shares	CSRIX
Cohen & Steers Realty Income Fund	CSEIX, CSDIX, CSBIX, CSCIX
Cohen & Steers Realty Shares	CSRSX
Columbia Real Estate Equity Fund	CREAX, CREIX, CRRVX, CRERX, CREEX, CRRFX, CREWX, CRECX, CREBX
Compass EMP REC Enhanced Volatility Weighted Fund	CWRAX, CWRIX, CWRTX, CWRCX
Davis Real Estate Fund	RPFRX, DREYX, DRECX, DREBX
Delaware Real Estate Investment Trust Portfolio II	DPRTX, DPRBX
Delaware Real Estate Investment Trust Portfolio	DPREX, DPRSX, DPRRX, DPRCX
DFA Real Estate Securities Portfolio	DFREX
Dunham Real Estate Stock Fund	DAREX, DNREX, DCREX
DWS RREEF Real Estate Securities Fund	RRRRX, RRREX, RRRAX, RRRSX, RRRBX, RRRCX
DWS RREEF Real Estate Securities Income Fund	REFAX, REFCX, REFIX, REFSX
Eaton Vance Real Estate Fund	EAREX, EIREX
EII Realty Securities Fund	EIIRX
Fidelity Advisor Real Estate Fund	FHEIX, FHEAX, FHETX, FHECX, FHEBX
Fidelity Advisor Real Estate Income Fund	FRIRX, FRIQX, FRINX, FRIOX
Fidelity Real Estate Income Fund	FRIFX
Fidelity Real Estate Investment Portfolio	FRESX
Fidelity Spartan Real Estate Index Fund	FSRNX, FRXIX, FSRVX
Fidelity Series Real Estate Equity Fund	FREDX, FREFX
Fidelity Series Real Estate Income Fund	FSREX, FSRWX
Forward Real Estate Long/Short Fund	KSRYX, FRLSX, FFSRX, KSRAX, KSRCX, KSRBX
Forward Real Estate Fund	FPREX, FFREX, KREAX, KRECX
Forward Select Income Fund	KIFYX, FSIMX, FFSLX, KIFAX, KIFBX, KIFCX
Franklin Real Estate Securities Fund	FREEX, FRLAX, FRRSX, FSERX
GMO Real Estate Fund	GMORX
Goldman Sachs Real Estate Securities Fund	GREIX, GRETX, GREAX, GRESX, GRERX, GREBX, GRECX
Great-West Real Estate Fund	MXREX
Heitman REIT Fund	OARTX, OBRTX
ING Real Estate Fund	CRARX, IREWX, IDROX, CLARX, CRWRX, CRCRX, CRBCX
INVESCO Real Estate Fund	REINX, IARFX, IARIX, IARYX, IARAX, IARRX, IARCX, AARBX
Ivy Real Estate Securities Fund	IRSAX, IREIX, IRSYX, IRSRX, IREEX, IRSCX, IRSBX
John Hancock Real Estate Securities Fund	JIREX
Johnson Realty Fund	JRLTX
J.P.Morgan Realty Income Fund	URTLX, JRIRX, URTAX, URTBX, URTCX
J.P. Morgan Security Capital U.S. Core Real Estate Securities Fund	CEEAX, CEERX, CEEFX, CEESX, CEECX
J.P. Morgan U.S. Real Estate Fund	SUSIX
Lazard U.S. Realty Equity Portfolio	LREIX, LREOX
Lazard U.S. Realty Income Portfolio	LRIIX, LRIOX
Manning & Napier Real Estate Series	MNRIX, MNREX
Morgan Stanley Institutional U.S. Real Estate Portfolio	MSUSX, MUSDX, MSULX, MURSX
Natixis AEW Real Estate Fund	NRFAX, NRFYX, NRFBX, NRFCX, NRFNX
Neuberger Berman Real Estate Fund	NBRIX, NBRFX, NREAX, NRERX, NRECX, NRREX
Nuveen Real Estate Securities Fund	FREAX, FARCX, FRSSX, FREBX, FRLCX, FREGX
Oppenheimer Real Estate Fund	OREAX, OREIX, OREYX, ORENX, OREBX, ORECX
PHOCAS Real Estate Fund	PHREX
PIMCO RealEstateRealReturn Strategy Fund	PRRSX, PETPX, PETAX, PETDX, PETCX, PETBX
Pioneer Real Estate Shares	PWREX, PYREX, PCREX, PBREX
Principal Real Estate Securities Fund	PIREX, PIRPX, PREPX, PRETX, PREJX, PRRAX, PRERX, PRENX, PRAEX, PRCEX, PRLEX
ProFunds Real Estate UltraSector ProFund	REPIX
Prudential Select Real Estate Fund	SREAX
Prudential U.S. Real Estate Fund	PJEAX, PJEZX, PJECX, PJEBX
REMS Real Estate Income 50/50 Portfolio	RREIX
REMS Real Estate Value-Opportunity Fund	HLRRX, HLPPX
Rydex Real Estate Fund	RYREX, RYHRX, RYCRX
SA Real Estate Securities Fund	SAREX
SEI Institutional Mgd Real Estate Fund	SETAX, SEIRX
Spirit of America Real Estate Income & Growth Fund	SOAAX
SSgA Clarion Real Estate Fund	SSREX
Stratton Real Estate Fund	STMDX
T.Rowe Price Real Estate Fund	TRREX, PAREX
TIAA-CREF Real Estate Securities Fund	TIREX, TRRPX, TRRSX, TCREX
Vanguard REIT Index Fund	VGSNX, VGRSX, VGSLX, VGSIX
Virtus Real Estate Securities Fund	PHRAX, PHRIX, PHRCX, PHRBX

REIT ETF	Symbol
Flex Shares	ASET
Wisdom Tree Global Ex-US	DRW
S&P 500 Equal Weight	EWRE
iShares FTSE Industrial/Office	FNIO
MSCI Real Estate Index	FREL
S&P REIT Index	FRI
First Trust S&P REIT	FRI
iShares Real Estate 50	FTY
Flexshares Global	GQRE
iShares Cohen & Streers	ICF
iShares International Developed RE	IFGL
iShares US RE	IYR
Premium Yield Equity REIT	KBWY
ETRACS Monthly Pay 2x Leverage	MORL
Market Vector Mortgage	MORT
iShares Global REIT	REET
iShares FTSE Mortgage	REM
iShares Residential	REZ
IQ US Real Estate Small Cap	ROOF
iShares FTSE NAREIT Retail	RTL
DOW Jones Global RE	RWO
SPDR Dow Jones	RWR
Schwab US REIT	SCHH
Super Dividend REIT	SRET
ProShares Ultra RE	URE
Vanguard REIT	VNQ
Vanguard Global ex-US	VNQI
iShares International Developed	WPS
Wilshire US REIT	WREI
Pacer Benchmark Data & Infrastructure RE	SRVR
Pacer Benchmark Industrial RE	INDS
Pacer Benchmark Retail RE	RTL
Hoya Capital Housing	HOMZ
NetLease Corporate RE	NETL

REIT Name	Ticker	Annual Increases/yr
Federal Realty	FRT	51
Universal Health Realty	UHT	33
National Retail Properties	NNN	29
Realty Income	O	27
Tanger Outlets	SKT	26
Urstadt Biddle	UBA	25
Essex Property Trust	ESS	25
W.P.Carey	WPC	22
National Health Investors	NHI	17
Equity Lifestyle	ELS	15
Digital Realty	DLR	15

Inflation Continues Its Climb – But So Do Dividends! (And the Musk Drama Continues Too)

Brad Thomas

467 postsJuly 13, 2022

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Inflation Continues Its Climb – But So Do Dividends! (And the Musk Drama Continues Too)

467 postsJuly 13, 2022

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