Real Estate

REIT Karma: What Comes Around Goes Around

Hand drawing Karma Cycle concept with black marker on transparent wipe board.


Sometimes you put good money into a good normal stock and still reap negative profits. Perhaps it receives bad press for some unjustified reason. Perhaps a recession hits. Perhaps the CEO resigns unexpectedly.

In that regard, I guess that karma doesn’t work out quite right.

But when you put good money into a good REIT, you’re going to keep getting money… no matter what kind of press it receives or the kind of economic conditions it enters. REITs are loyal like that.

The way they’re loyal is because they offer a quarterly (or, occasionally, monthly) dividend for every share purchased. They’re legally required to do so and structurally incentivized to raise those prices every year.

Sometimes they even raise them quarter over quarter.

Also because of their structure, they’re able to offer higher payouts than most other dividend-paying stocks. That makes REITs – at least the best of them – a win-win-win all around.

It’s hard to go wrong or fall flat in this regard. Better yet, it’s downright easy to build a strong, durable financial foundation for retirement when you invest in REITs.

Plus, when you really know what you’re doing, you can actually become a millionaire.

Upper-Middle Class, Upper Class, and Filthy Rich

To illustrate my point, I’m going to quote Forbes,

“..real estate is the third most common way people become billionaires.”

Yes. That’s right. Billionaires. I know I only said “millionaires” above. Bear with me though…as I explained,

“Over vast stretches of time, REITs have proven [they’re not just] a great source of income, but [offer] market-beating returns as well.”

For example, over the past 20 years REITs delivered 9.1% annualized returns, making them the best performing asset class you could own (and outperforming the S&P 500 by 26% annually). But wasn’t the last 20 years an aberration… a time of steadily falling long-term interest rates that boosted REIT returns and won’t be repeated in the future?

Actually, REITs have been a great long-term investment no matter the interest rate environment.

It’s true. While REITs definitely have their good years and their not-so-good years, add them all up over a 40-year period… and you’ll find that they come out ahead.

Ipso facto, so can you if you play your karma cards right.

Retirement Rarely Looked So Good as With REITs

By playing “your karma cards right,” I mean reinvesting the dividend payments you receive from the shares you own.

In short, when you buy into a solid REIT, it gives you money in return. If you put that money right back into it… it’s going to automatically send a larger dividend check your way the next quarter.

This only makes sense when your exact payout is based on your exact holding in the company.

Keep that karma-centric reinvestment program up for years – or better yet, decades – and you could be living in a very sweet spot with:

  • A very comfortable retirement, complete with lovely annual vacations
  • A downright wealthy retirement, complete with luxurious accommodations on your bi-annual trips around the world
  • An absolutely exquisite retirement, complete with extravagant, lavish excursions whenever your ridiculously rich heart desires.

Again, it all depends on how much you’re putting in over what period of time. But there you have it nonetheless.

Call it logic. Call it karma. Call it a financial form of paying it forward.

Whichever way you look at it, when you treat REITs right, they’re going to return the favor.

Get Your Karma Started

In my newsletter, Forbes Real Estate Investor, I provide in-depth analysis on over 100 REITs and one of the most beaten down names I’m recommending is Iron Mountain (IRM).

I’m sure you have seen this particular company’s branding on the side of a truck or perhaps on stacks of boxes in your CPA or attorney’s office. But you probably didn’t know that you can purchase shares in this 68 year-old company at a significant discount.

That’s right, Iron Mountain – serving customer in over 230,000 customers in 53 countries on six continents – was recently downgraded by an analyst at Bank of America – and we decided to take advantage of the pullback to pick up more shares in this global information management firm.

A few years ago the company converted from an ordinary C-corp into a REIT which provides a whole new meaning for the company because of the juicy dividend payouts. The company is paying out around $2.46 per share in annual dividends and the AFFO (adjusted funds from operations) is around $3.01 per share. Based on the latest closing price, the shares yield 8.0%.

The big threat related to Iron Mountain is the fact that some believe that paper may become instinct, and that companies may no longer need to store their precious papers inside of safe and secure boxes.

Yet these days, Iron Mountain has an impressive client list (95% of the Fortune 1,000) and the company has begun adapting to technology by upselling customers into shredding, digitizing, and data storage. Collectively, Iron Mountain has developed an impressive moat with powerful scale.

With no threat of a paper extinction anytime soon, I believe that Iron Mountain deserves a strong buy recommendation and to learn more about the potential value that can be unlocked subscribe to my newsletter (HERE).

I own shares in IRM.

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