2023-11-22 06:55:00 ET
You can probably find a certificate of deposit (CD) with an interest rate of around 5% today, which is a problem for dividend stocks like real estate investment trusts (REITs). Simply put, that's a lot of yield without having to take on the inherent risk of owning stocks. But with a CD you miss out on the potential for income growth over time, which is why even conservative income investors should have at least some dividend stock exposure. A pullback in REITs has opened up an opportunity to buy industry-leading names like Realty Income (NYSE: O) and Simon Property Group (NYSE: SPG) .
While rising interest rates have caused some conservative income investors to shift toward options like CDs , that isn't the only headwind higher rates pose to REITs. Buying institutional-level rental properties requires a lot of money and REITs tend to have large payouts, so they have to use stock sales and debt issuances to pay for acquisitions. When rates go up, the costs a REIT faces go up too.
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For further details see:
2 Bargain Basement Stocks to Buy on the Dip