REIT
U.S. Retirement REIT Looks North for Extended Baby Boomer Play
By John Whitefoot for Daily Gains Letter | May 13, 2013
In 2011, the first mass of baby boomers started to retire in the United States to the tune of 10,000 per day, which will continue for the next 17 years. Making up more than one-quarter of the population, the baby boomer generation controls the largest portion of the country’s disposable income. This has opened the door to a lot of opportunities for investors looking to capitalize on the retiring baby boomer generation.
Not surprisingly, Canada is also home to its own wave of retiring baby boomers. Interestingly, the Canadian baby boomer generation began one year later (1947) and lasted two years longer (1966) than the baby boom in the U.S. (Source: Kidd, K., “Canada’s baby boom different from U.S.,” Toronto Star web site, March 9, 2013, last accessed May 10, 2013.)
For some investors, that translates into additional opportunities for growth.
In Canada, baby boomers make up 30% of the population, with seniors making up the fastest-growing segment of the Canadian population, a trend that is expected to continue for the next few decades. In 2011, an estimated five million Canadians were 65 years of age or older, a number that is expected to double through 2036. By 2051, about one in four Canadians is expected to be 65 or over. As Canadian baby boomers retire, they’re going to need somewhere to live. (Source: “Canadians in Context – Aging Population,” Human Resources and Skills Development Canada web site, last accessed May 10, 2013.)
Those lucrative factors have not gone unnoticed on Wall Street.
Health Care REIT, Inc. (NYSE/HCN) announced recently that it agreed to buy a 75% stake in Revera … Read More
How to Profit from Aging Baby Boomers and Real Estate
By John Whitefoot for Daily Gains Letter | Feb 22, 2013
A REIT (real estate investment trust) is a company that owns and, for the most part, operates income-producing real estate. REITs are a great way for individuals to invest in real estate without actually having to own real estate.
It’s also a great way to generate income from guaranteed dividends. To be a REIT, a company must by law distribute at least 90% of its taxable income to shareholders annually in the form of dividends.
REITs pay out almost all of their taxable income to shareholders, so investors have historically looked to REITs for reliable and significant dividends—which are typically four-times higher than those of other stocks, on average.
Because REITs pay out at least 100% of their taxable income to investors, they don’t pay any corporate tax. Most states also don’t require REITs to pay state or income tax. Taxes are paid by shareholders on dividends and any capital gains.
Having said that, investing in a REIT only makes sense if the real estate market is doing well. While the U.S. housing market is beginning to heat up, the rally is still young. And many investors are still justifiably wary of stepping back into real estate after seeing home values evaporate following the Great Recession.
Because REITs operate commercial properties in every major metropolitan area across the country, it’s important to find which kind of REIT is best suited to your investing needs.
Overall, REITs outperform the markets. Between 1971 and 2010, publicly traded REITs provided compound annual total returns of 12%. During that same time frame, the S&P 500 returned 10%, the NASDAQ returned 8.4%, and the Dow … Read More
