The Fed’s taper talk is really throwing investors for a loop — especially those looking for income. With the potential of rising interest rates on the table, investors have shunned a variety of high-dividend-paying sectors and shares. Asset classes like long-term bonds and master limited partnerships (MLPs) have all plunged in wake of the Fed’s news that it could begin slowing down its bond buying programs sooner than later.
However, while selling 30-year bonds makes some sense, it seems that investors are selling anything that throws off a yield indiscriminately. That’s leading to some pretty big opportunities for investors to look beyond all the taper tantrum talk.
One such opportunity lies within dividend-paying shares of real estate investment trusts (REITs).
Like much of the high-yield universe, REITs have been sold down. Yet, owners of shopping plazas, office buildings and hospitals have historically performed quite well in rising interest rate environments. According to research at Invesco (IVZ), there have been 12 sustained periods of time when the 10-year treasury yield rose 75 basis points or more since 1994. REITs have performed wonderfully during this time, and have risen 14% on average. That beats the 7.7% returns of the S&P 500 during the same time period.
All in all, REITs have what it takes to face the Fed head-on and win. Here are five quick and easy ways to giant more exposure to the asset class courtesy of exchange-traded funds (ETFs).