4 high quality REITs that will boost your passive income (Featuring: Mark Roussin)

Welcome to the +235 subscribers who joined this past week and are now part of 8,855 millionaires, CEO’s and high-performing entrepreneurs who read the #1 financial newsletter on Substack.

If you’re not subscribed to The Profit Zone, you’re missing out.

Click below to join and make sure every issue is sent right to your inbox on Monday mornings.

Tweet of the Week

A Background on our Guest Writer

This week’s guest post is brought to you by Mark Roussin, CPA, Founder of Roussin Financial. Mark is a wealth coach who has amassed almost 100,000 followers on Twitter. He specializes in Dividend Investing with a strong focus on Real Estate Investment Trusts (REITs).

In today’s post, Mark will be taking you through what a REIT is, how they work and giving you some high-quality examples of REITs he’s buying in today’s market.

If you want to boost your passive income, keep reading.

Without further ado…

Here’s Mark Roussin on REITs.

If you follow me on Twitter or read my weekly newsletter (The Dividend Investor’s Edge) on substack, then you know I love REITs.

REITs or Real Estate Investment Trusts have always held a special place in my portfolio. I have set out to always maintain a 15-20% exposure rate to REITs.

In today’s post, I want to tell you a little more about REITs and why I tend to focus on them so much.

To begin, let’s start with what a REIT is.

A REIT is a company that owns, operates, or finances income producing real estate.

REITs are NOT taxed at the corporate level as long as they follow a set of rules, which are as follows:

• At least 75% of their total assets should be real estate-related assets

• At least 75% of gross income needs to be derived from real estate-related activities (rents, interest on a mortgage, etc.)

• Pay at least 90% of their taxable income to investors in the form of dividends

• Be an entity taxable as a corporation (even though they are not taxed)

• Be managed by a board of directors

• Have a minimum of 100 shareholders

• Have no more than 50% of its shares owned by 5 investors or less

REITs are a great way for investors to gain real estate exposure with a hands-off approach. You do not have to worry about the 2 AM phone calls about a broken water heater or a leaking sink. Plus, you have quick access to your capital at a moment's notice, since REITs trade like stocks on an exchange.

Not only do REITs provide real estate exposure, but they also have been a top-performing asset class over the past few decades. For years, REITs fell under the Financials sector, but have since been broken out into their own sector under Real Estate within the S&P 500.

After all, REITs are just another type of stock, so you can invest in individual REITs or you can invest in REIT ETFs. Today, I will share a few of my favorites within each category.

Let’s begin with REIT ETFs. Two of the most common REIT ETFs are:

• VNQ: Vanguard Real Estate ETF

• XLRE: Real Estate Select Sector SPDR ETF

As you will see, both ETFs share similar top 10 holdings. The other great thing is that they are both low-cost ETFs.

Now for a couple of individual REITs for you to take a closer look at.

You cannot talk about REITs and fail to mention The Monthly Dividend Company, which is Realty Income (O). Realty Income is the gold standard when it comes to REITs. They operate as a net lease REIT in the retail sector. What this means is that many of the typical landlord costs are passed onto the tenants. These costs include Property Taxes, Insurance, Maintenance, etc.

Realty Income has a great tenant base that they work with, with many of them being investment-grade tenants, which adds to the safety of the REIT. They pay a monthly dividend and have been increasing their dividend for 25+ consecutive years, making them a Dividend Aristocrat.

Another solid REIT to consider, and it is one I have added to recently is American Tower (AMT).

In today’s day in age, telecommunication companies like AT&T, Verizon, and T-Mobile are battling it out hard to gain customers. Those battles eat into the companies margins. Instead of choosing one of them and hoping you hit the jackpot, why not invest in the infrastructure behind all of them? Enter American Tower…

American Tower is the leading cell tower REIT and one of the largest REITs on the market today. They build cell towers and lease them out to telecom providers. 5G is the latest and greatest with incredible speed upgrades over the likes of 4G, but 5G’s top wavelength band cannot travel very far giving an even bigger need for more cell towers.

Both REITs are leaders in their respective spaces, but both pay very different dividends. With REITs, you tend to see higher dividend yields because if you recall, they are required to pay out 90% of their taxable income to shareholders in the form of a dividend. As such, higher dividend yields and lower dividend growth is common among REITs. This is very much the case when it comes to Realty Income, which pays a 4.5% dividend yield and has a 5-year dividend growth rate of just 4%.

American Tower on the other hand is an anomaly as they pay a 2.7% dividend yield, which is not all that high, but they are also increasing their dividend at a 5-year annual rate of 17.5%, which is absolutely incredible for dividend investors. Dividend growth REITs are not all that common so finding a company like this is gold.

To wrap up, REITs continue to be a great investment. There are a ton of options, but I tend to focus on the blue-chip REITs, which are leaders in their respective sectors.

If you subscribe to my substack, you will be able to see EVERY position I hold within my dividend portfolio, which includes a good number of REITs.

Thank you for taking the time to read my guest post in The Profit Zone!

Mark Roussin, CPA (Founder of Roussin Financial)

Some resources to help you make more money:

• My Full Stock Portfolio - get access to all of my positions and get updates every time I buy or sell.

• Money Mastermind - the “Money Bible”. Myself and 29 other expert creators teamed up to create the most all-inclusive 280-page finance book on the market. Over 100 topics about money including real estate, crypto, budgeting, dividend stocks, online business, and more.

• The Complete Investors Accelerator Pack - everything you need to build a dividend portfolio that grows on itself. Learn more about dividend investing, how to analyze dividend stocks, what to do with your dividends and how to build a stream of passive income through the stock market.

• The Molina Letter - the only product that’s helped me grow my Twitter account to 30,000 followers. Fill in the blank templates you can copy to help you create viral content with minimal effort. A big following gives you the key to creating products and making money online. There’s a reason why 500 people are subscribed to this letter.

• TweetHunter - let the software do the tweeting for you. The only scheduler you’ll ever need. This tool makes me money in my sleep. Give it a try for free.

• Hipster Budget Guide - having trouble saving money? Learning how to budget is your solution. This book will show you ways to save money you never even thought of. Worth every penny.

Disclaimer: The publisher does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.

Dividend Dominator is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.  

THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME.  THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION.  INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.

Any projections, market outlooks or estimates herein are forward-looking statements and are inherently unreliable.  They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.  Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein.  The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.

The publisher, its affiliates, and clients of the publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities).  To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.

Neither the publisher nor any of its affiliates accept any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.

By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.