The clobbering in the REIT space isn’t a company here and a company there. Much of the industry has been getting pummeled amid inflation and interest-rate fears, with the investing world once again forgetting that REITs and their growing dividend payouts are well-protected against these forces over time.
That has created an opportunity that we’ve simply never seen before in the PowerShares KBW Premium Yield Equity REIT Portfolio.
The KBWY is unlike the Vanguard REIT ETF, Schwab US REIT ETF and other basic REIT funds in that this isn’t a collection of high-market-cap real estate plays. Instead, KBWY invests in a basket of 30 small- and mid-cap REITs and uses a methodology that allocates higher weights to stocks with higher dividends. Washington Prime Group and New Senior Investment Group are the ETF’s largest weights as of this writing.
KBWY’s yield had been expanding for years thanks to good, old-fashioned dividend growth, but the recent plunge in prices has shot the fund’s annual dole to an all-time high 8.4% on a trailing 12-month basis.
Simply put: If you believe in a near-term rebound across the board, this ETF will pay you more than most to express your inner bull.
PowerShares KBW Premium Yield Equity REIT Portfolio:
Dividend Yield: 8.4%
Some small-cap dividend ETFs feature sizable allocations to real estate stocks while other funds in this category feature no real estate exposure. Investors without real estate exposure can take advantage of the high-yielding PowerShares KBW Premium Yield Equity REIT Portfolio (NASDAQ:KBWY).
KBWY has a 12-month distribution rate of 8.46%, well above what income investors will find on traditional real estate funds. While this dividend ETF has the capacity to hold mid-caps, its current portfolio is comprised entirely of small-caps, indicating that smaller real estate companies can provide investors with big income opportunities.
KBWY holds 30 stocks with an average market value of $1.99 billion, putting the fund at the upper end of the small-cap spectrum. This PowerShares ETF has outperformed several of its well-known large-cap rivals over the past three years, but KBWY has been more volatile than large-cap real estate ETFs over that period.