Investors, jumpy about the volatile stock market and a barrage of corporate earnings misses, continue to see real estate investment trusts as a refuge, thanks to their stable and attractive dividend yields.
However, some market experts caution that investors should carefully cherry- pick such investments in light of the prolonged economic downturn and not blindly base their choices solely on who offers the biggest yields.
REITs have posted total returns of 6.6% on average in 2002, with the dividend yield - which currently averages 7% - accounting for most of the gains, according to the National Association of Real Estate Investment Trusts. By contrast, the S&P 500 and Russell 2000 are down 18%, and the Nasdaq is off 29%.
'(REIT) yields are as - if not more - compelling than they were at the beginning of the year,' said Morgan Stanley analyst Matt Ostrower. 'It would be naive to assume dividend yields are not important in this low interest rate environment.'
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(source: Dow Jones Business News)