As we head into yet another U.S. election year, investors should expect volatility to spike. And for retirees who don’t have as strong a stomach as other investors, here are the REITs that can provide the perfect balance of high income and low volatility.
This piece will focus on three high-yield REITs with low betas that allow retired investors to do better than market averages without losing sleep over massive market moves on any given day. So, without further ado, here are the REITs in ascending order based on yield.
WPT Industrial REIT
WPT Industrial REIT (TSX:WIR.U) could be the best industrial REIT since Pure Industrial Real Estate Trust (PIRET), a top-performing industrial REIT that got scooped up a few years ago.
Industrial REITs are a hot commodity, and WPT should be at the top of your buy list if you’re looking to benefit from strong secular tailwinds driven by the continued rise of e-commerce.
Higher consumer spending online means more packages need to be shipped. More packages shipped means a higher demand for warehouse stays, and that’s where WPT shines.
The REIT owns and operates warehouse and distribution properties across 18 U.S. states. As cash flows are in U.S. dollars, investors are also able to benefit from a weakening loonie relative to the greenback.
WPT Industrial sports a 5.6% yield at the time of writing, and as management goes on the hunt for acquisitions to further bolster its impressive portfolio of industrial properties, I see above-average AFFO growth potential over the next decade and beyond.
Moreover, WPT looks like a coiled spring from a technical perspective, setting shares up for a potential bounce in 2020. Shares of the name have been consolidating for nearly three years, and with a mere 0.65 beta, shares are unlikely to overreact on news that’ll send the broader markets up or down by triple-digit percentage points.
Inovalis REIT (TSX:INO.UN) is another under-the-radar REIT with a very uneventful stock chart. Shares of Inovalis are currently at all-time highs while continuing to possess a bountiful 7.6% yield, which is unheard of for a name that’s at or around its highs.
The distribution is by design, and not only is it safe and supported by funds from operations, but it’s also subject to some growth over the next few years, as management looks to expand upon its relatively small portfolio of French and German office properties.
While you may not get much in terms of capital gains, you will get massive distributions to supplement your monthly income fund. Similar to WPT, you’re also getting a name that’s less likely to react on big-pictures news events with the low 0.38 beta.
Office properties may not be facing a secular tailwind as industrial properties are. One could argue that offices are facing a mild headwind as the “work from home” phenomenon continues to take off. Despite this, Inovalis remains a robust long-term play because a vast majority of its properties are located within some of the hottest urban areas in France and Germany.
Inovalis properties are in prime locations — and that’s where the REIT’s real long-term strength lies.
Stay hungry. Stay Foolish.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette has no position in any of the stocks mentioned. Inovalis is a recommendation of Dividend Investor Canada.