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  • Alex Pettee, CFA

5 High-Yield Real Estate ETFs For Income Investors

  • For full article, click here to read on Seeking Alpha!

  • In a world of perpetually low interest rates, investors have piled into yield-oriented equities and real estate sectors to quench their vivacious appetite for yield.

  • High-yield real estate ETFs are especially popular, which offer juicy dividend yields of 6-10% compared to their broad-based real estate ETF counterparts yielding below 4%.

  • Real estate ETFs are an excellent option for investors seeking low-cost, liquid, and diversified exposure to real estate, but it’s important for investors to understand what’s under the hood.

  • On Wall Street, there’s certainly no free lunch. To achieve higher yields, high-yield ETFs typically assemble a collection of misfits, outcasts, small-caps, and recent underachievers.

  • Higher-yielding real estate ETFs have generally exhibited less volatility than their broad-based peers, but have generally underperformed on a total return basis. We analyze five high-yield ETFs.

With nearly 50 real estate ETFs to choose from, there's something for nearly every investor at every life stage and level of risk tolerance. Not all real estate ETFs are created equal, however, and like any real estate investment, investors should take a "house tour" before they purchase. In our ETF Spotlight series, we take a look under the hood of some of the most popular real estate ETFs and highlight the strengths and idiosyncrasies of these funds.

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Hoya Capital Research & Index Innovations is an affiliated index provider and research firm that builds custom indexes tracking U.S. commercial and residential real estate sectors, including indexes tracked by exchange-traded funds (ETFs). 

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