Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the real estate industry to thrive over time, the SPDR Dow Jones REIT ETF (NYS: RWR) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.
ETFs often sport lower expense ratios than their mutual fund cousins. The SPDR ETF's expense ratio -- its annual fee -- is a low 0.25%.
This ETF has performed rather well, beating its benchmark over the past three, five, and 10 years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 10%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Plenty of REITS had strong performances over the past year. HCP (NYS: HCP) , focusing on health care, gained 18% and was recently yielding 4.8% as well. The company has seen its revenue and earnings growth soar by more than 30% apiece over the past year, and its management notes that it is raising its performance expectations for the year and seeking high-quality acquisitions.
Health Care REIT (NYS: HCN) , yielding 5.3% recently, gained 17%, focusing on properties such as residential care facilities and doctors' offices, which should see much demand as our population ages. Management recently boasted of high occupancy rates, promising new investments, and the shedding of non-core assets.
General Growth Properties (NYS: GGP) , yielding 2.2% recently, gained about 13% over the year. It has emerged from bankruptcy protection with restructured debt and may be among the small subset of bankruptcy declarers that makes investors wealthier. It has been selling off its more poorly performing properties in order to strengthen its portfolio and pay down debt.
Ventas (NYS: VTR) , recently yielding 4.2%, gained 13% as well. The company recently reported earnings that more than doubled, due in part to its having acquired Nationwide Health Properties and the real estate assets of Atria Senior Living Group for $5.8 billion and $1.5 billion, respectively, among other recent deals.
The big picture
Long-term demand for real estate isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
REITs typically offer hefty dividend yields. If you'd like to review some non-REIT stocks that also offer great dividends, as well as a good chance of stock-price appreciation, check out our special free report "Secure Your Future With 9 Rock-Solid Dividend Stocks."
At the time this article was published Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, holds no position in any company mentioned. Click here to see her holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Health Care REIT. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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