Board members...I going to 'stick my neck out' and make a prediction (before it happens)...there was so much selling on the REITs today on high volume, that I think the sellers 'will start drying up' and the income investors 'will start taking over'...dividends of about 12% or more is still not chump change...
I feel that is just to much pull-back, at to fast of a rate across the board and the smart income investors will start to take advantage of it...there is to much pull-back even if some of the REITs reduce their dividends a bit...my research shows that a lot of REITs are sitting on a lot of cash and I also predict there may be some 'special dividends' near the end of the year...
madmax, I appreciated your support on other message boards, it is always great to have the on-going back-up of the U.S. Army...you served your country and now your friends 'very well'...! That said, my neck is now out (lol)...! $tagg...!
There will be a point of reversal but at what point is the question. The blogosphere has convinced too many that divi stocks are going to crash due to the '13 tax expiration. Most are proclaiming a 15% correction as that is the delta between the 15% divi rate and the assumed average 30% income rate. Does a 12% divi matter when a 15% (or more ) capital loss is in store ?
If a REIT has a sound balance sheet and appropriate income stream to support the divi's they will come back from where ever the bottom is. Folks that think they are going to abandon divi stocks and replace them with growth stocks producing the same effective returns are going to learn the hard way. The day of growth stocks making YoY 12% gains across the board are gone. The ridiculous part of it all is, if taxes are going up they are going to go up everywhere so 15% here or there doesn't matter. Unless a stock goes into deep discount short term I am holding until December when the Sheeple blindly do as they are told. Right now it's just those pushing to the front of the line to get off the boat first. Lifeboats yet to get lowered. It is going to be a feast !
Really, I am not sure if you are talking about mortgage REITS in your comments or equity REITs when you are speaking about their balance sheets. For the most part, on this board we spend much time discussing mortgage REITs mainly because they have offered double-digit yields and great share price performance over the last few years. If you are talking about mREITs, then your comments about "strong balance sheets" are really misplaced. All mREITs use massive amounts of leverage (some 6 to 9 times equity) to get their returns and pay their dividends. mREITs are really just leveraged bond funds, except unlike bond funds that are constrained in the amount of leverage that they can use by the Investment Company Act, while mREITs are exempt from that act and thus can use massive leverage. The biggest question about some mREITs is how will declining spreads effect their ability to continue to pay mid-teen dividends. So far some mREIT dividends are slowly declining, but that has not resulted in a change in their stock price trends.
In a way, I agree with your comments about the furor over the fiscal cliff, but after such a large gain in dividend paying stocks, investors may just use this as an opportunity to book some profits. But I think there is a difference in the categories of "dividend paying stocks." Depending on what the economy does, one result of sector rotation, may see investors sell mREITs and move into MLPs or BDCs or stocks like SFL. You could also see shifts out of staple stocks and utilities. Many individual investors are typically late to see the trend change and the temptation to hold on to high dividend paying stocks is high, especially when finding supplements is difficult. The financial media and brokerage firms do a poor job of identifying high yield alternatives, which is why these message boards can be useful.
Board members...so for this has been a typical investment year, eight out of ten years we have a:
First, 'so goes January, so goes the year.'..the market have been running true to this...
Second, 'sell in May and go away'...we did have a pull-back in May...
Third, 'mid-summer rally'...we did catch a nice rally in July until the end of September...
Fourth, 'Bloody October'...it has been bloody enough for me already...
Fifth, a 'Santa Clause Rally'...not yet of course, but it remains to be seen (???)...
That said, my REITs are seeing a bit of a snap-back at this time, so it looks like some of the sellers are drying up and some income investors are taking advantage of the 'higher yields' on the market pull-backs...however, I think we will still see 'more pain' before the middle of November...! Keep the faith...! $tagg...!
You are correct I would be shocked and displeased if Marines were so churlish.
Marines are trained to accurately access the battle field situation to the corporal level and take the best course to get the job done and take care of the people.
Nothing manly in calling names and running away.
Oh we are exporting record amounts of gasoline as our demand continues to decline.
AND fellow Americans are forced to pay $3.66 per gge of crony capitalist corn ethanol while our gasoline with no domestic demand is exported for under $3.00. In fact demand for gasoline has decline so much the ethanol corruption mandates cannot be met so the radical EPA is forcing E15 which will damage or cars and certainly cause additional ware. With no disclosure to drivers required.
Now Honorable West served in the Army so I it would be unethical to beat the whole army for lower standards of behavior. But calling names trying to be a bully and then running away is a symptom of a standards problem.
Investment boards only work with accurate information rather than juvenile posing.
Name calling does not cover up you most basic mistake. Nor does in change you were 180 degrees wrong.
Gee maybe a Army Vet and yourself proclaimed anti-American African can join together too. No shame.
I also own TWO, been buying for the past 2 years (heavy on the SO's and x-div). I took a small portion off the table about a month ago @ 11.80, thinking the price to book was getting too big - but TWO kept going up. Even with todays pullback, TWO is the biggest gainer that I own. Lets hope that the book price rally that took place just after the end of last quarter kept going....hang in there!!