Real estate stocks let you ‘have your cake and REIT it, too’: Analyst

In today's unusual market environment, real estate investment trusts are among the best investments, according to Evercore ISI's head of technical analysis.

REITs consist of real estate holdings but trade as stocks. And for tax reasons, they pay out nearly all of their income in the form of dividends, which makes them a popular yield vehicle in the era of minuscule bond yields.

For instance, the Vanguard REIT ETF (VNQ) pays a dividend yield of nearly 4 percent, which is nearly in line with that of the Vanguard Long Term Corporate Bond ETF (VCLT).

"With both stock and bond prices at record highs, this is a great way to have your cake and REIT it, too, if you will," Evercore ISI's Rich Ross said Tuesday on CNBC's "Trading Nation."

While he admits that the chart looks "overbought," he observes that "all of the [central bank] policy is driving people into yield-seeking behavior, and that plays right into the REITs. So I'm a buyer here on the breakout."

Indeed, REITs have already enjoyed a great year. The MSCI REIT index has risen some 14 percent this year, dwarfing the performance of the S&P 500.

With bond yields plumbing record lows, "investors are desperate for yield," and for that reason, REITs are enjoy a "rising-tide-lifts-all-boats type of experience," Gina Sanchez of Chantico Global said Tuesday on "Trading Nation."

Given that she sees yields remaining low, Sanchez believes that the REIT boon "continues for some time."


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more