PSR - KBWY: Continued Risk For Dividend Cuts And Share Price Decline
2024-06-18 16:08:03 ET
Summary
- Invesco KBW Premium Yield Equity REIT ETF (KBWY) is a strong sell due to unsustainable high dividend payout ratios and poor growth characteristics for its REIT holdings.
- While KBWY offers a high 8.87% yield, its methodology for selecting REITs based on the highest dividend yield has led to low-quality holdings and reduced REIT-type diversification.
- REITs historically experienced strong performance at the end of Federal Reserve tightening, which may be on the horizon as interest rates are reduced.
- As an alternative, I favor PSR and VNQ as both have holdings with positive AFFO growth, relatively low expense ratios, more sustainable dividends, and greater REIT-type diversification.