Considering the fact that there are so many REITs these days, what are some factors to take into account?

Hi Melissa!

Listed below are some key factors to be considered when investing in REITs:

Total Returns: REITs are total-return investments, and that’s why investors should consider companies that have done well historically at providing both dividend income and growth.

Liquidity: REITS have relatively lower liquidity risk as compared to directly investing in real estate. Investors should look for REITs that are actively traded on an exchange.

Industry Type: Not all REITs will have the same outcome. For instance, Singapore REITs have six broad categories: office, retail, residential, healthcare, hospitality, and industrial. Different properties with their specific characteristics affect the REIT’s growth, risk profile, and performance in different ways.

Stability: Strong management can make a huge difference. Investors should consider companies with a long-term track record.

Quality of the REIT: There are far too many factors to consider when making any investment. Quality is one that cannot be compromised. Investors should look for REITs with great properties and tenants that generate solid cash flow.

Diversification through REIT ETFs: Instead of buying individual REIT stocks, investors should consider diversification through REIT ETFs like the Vanguard Real Estate ETF (VNQ).

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You may also want to consider their DPU. A good REITs increases its DPU over time.

Frequency of Rights issue, as it dilutes your share. A well-managed REITs should not be always asking me for money.

Generally, a good REITs should always give you capital appreciation together with dividends.