Even with current higher bond yields and the new tax relief on dividend payouts, U.S. real estate investment trusts (REITs) are expected to provide excellent yields, a Janus executive told Reuters.

Saying that more gains by U.S. bond yields would fall slightly short of those of REITs, Janus fund manager William Schaff told Reuters that despite continued stagnancy in office and apartment buildings, the growing single-family residence market will keep REITs afloat.

Schaff said that with 10-year Treasuries hovering around 4.2%, the current 6.4% average of REIT yields makes them attractive to investors.

One of the main benefits of most REITs, according to Schaff, is that they have built-in consumer price index inflators, thanks to the long-term leases to which many are attached. "So, in effect, you end up with an inflation-adjusted dividend stream, which makes it more compelling than fixed-income paper," Schaff said.

Even the new tax break on corporate dividends hasn’t halted attraction to REITs by investors. This is despite tax rates as high as 35% for some REIT investors.


The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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