REIT ETFs offer a convenient way to invest in real estate by tracking indexes of equity REITs, providing exposure to diverse properties and steady dividend income. They are passively managed, typically focusing on major REITs, and are ideal for investors seeking consistent returns without direct property management.
Hence, for investors seeking steady cash flow, strong REIT ETFs like the Schwab U.S. REIT ETF (SCHH), iShares Core U.S. REIT ETF (USRT), and Global X SuperDividend REIT ETF (SRET) are top picks this August.
REITs offer reliable income by distributing at least 90% of taxable income as dividends, providing consistent payouts for investors. In 2024, REITs are poised for growth due to potential interest rate cuts and strong performance in sectors like healthcare, industrial, and data centers.
The REIT market, valued at $111.98 billion this year, is set to expand at a CAGR of 12.9%, reaching $231.29 billion by 2031. This expansion is fueled by the booming residential sector, increased demand for storage solutions, and supportive government infrastructure incentives, despite challenges from higher property taxes and interest rates.
Furthermore, diversified REITs reduce risk by providing stable income and potential long-term growth in property value, making REIT ETFs a strong option for steady cash flow. Given these trends, let’s evaluate the fundamentals of the three REIT ETFs mentioned above.
Global X SuperDividend REIT ETF (SRET)
SRET is an exchange-traded fund launched and managed by Global X Management Company LLC. The fund invests in the public equity markets of the global region. It invests in stocks of companies operating across mortgage real estate investment trusts (REITs), financials, diversified financials, and equity real estate investment trusts (REITs) sectors. It invests in growth and value stocks of companies across diversified market capitalizations. The fund invests in dividend-paying stocks of companies. It seeks to track the performance of the Solactive Global SuperDividend REIT Index by using the full replication technique.
With $221.20 million in assets under management (AUM), SRET’s top holding is National Health Investors, Inc. (NHI) with an 4.58% weighting, followed by Omega Healthcare Investors, Inc. (OHI), with a 4.38% weighting, and Sabra Health Care REIT, Inc. (SBRA), with 3.77%. It has a total of 32 holdings.
It has an expense ratio of 0.59%, higher than the category average of 0.41%. It currently has a NAV of $21.87. Moreover, SRET’s fund outflows came in at $6.18 million over the past month.
The fund’s annual dividend of $1.62 yields 7.44% on the current share price. Its four-year average yield is 7.84%.
SRET has gained 9.7% over the past three months and 8.6% over the past six months to close the last trading session at $21.78.
SRET’s POWR Ratings reflect this promising outlook. The VWO’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
SRET has an A grade for Buy & Hold and Trade. Of the 31 ETFs in the A-rated Real Estate ETFs group, it is ranked #14. Click here to access all of SRET’s POWR Ratings.
iShares Core U.S. REIT ETF (USRT)
USRT is an exchange-traded fund launched by BlackRock, Inc. and managed by BlackRock Fund Advisors. It invests in the public equity markets of the United States. The fund invests in stocks of companies operating across real estate and equity real estate investment trust (REIT) sectors. It invests in growth and value stocks of companies across diversified market capitalizations. It seeks to track the performance of the FTSE Nareit Equity REITs Index by using the representative sampling technique.
With $2.69 billion in AUM, the fund has a total of 131 holdings. USRT’s top holding is Prologis, Inc. (PLD) with a 9.96% weighting, followed by Equinix, Inc. (EQIX) with a 6.56% weighting, and Welltower Inc. (WELL) with 5.91%.
USRT has an expense ratio of 0.08%, lower than the category average of 0.41%. It currently has a NAV of $60.03. Its fund inflows came in at $354.07 million over the past three months.
The fund’s annual dividend of $1.71 yields 2.86% on the current share price. Its four-year average yield is 3.02%. Its dividend payouts have increased at a CAGR of 6% over the past three years.
USRT has gained 23.7% over the past nine months and 19.4% over the past year to close the last trading session at $60.28.
USRT’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Buy & Hold and Trade and a B for Peer. It is ranked #5 in the same group. To access all the POWR Ratings for USRT, click here.
Schwab U.S. REIT ETF (SCHH)
SCHH is an exchange-traded fund launched and managed by Charles Schwab Investment Management, Inc. The fund invests in the public equity markets of the United States. It invests in stocks of companies operating across various real estate and REIT sectors. It invests in growth and value stocks of companies across diversified market capitalizations. The fund seeks to track the performance of the Dow Jones Equity All REIT Capped Index by using the full replication technique.
With $7.15 billion in assets under management (AUM), SCHH’s top holding is PLD with an 8.53% weighting, followed by American Tower Corporation (AMT), with a 7.52% weighting, and EQIX, with 5.69%. SCHH has a total of 118 holdings.
SCHH has an expense ratio of 0.07%, lower than the category average of 0.41%. It currently has a NAV of $22.48. Its fund inflows came in at $394.24 million over the past year.
The ETF pays an annual dividend of $0.66, which yields 2.95% on the current price. SCHH has a four-year average dividend yield of 2.66%. Its dividend payouts have increased at a CAGR of 11.1% over the past three years.
SCHH has gained 18.7% over the past year and 20.4% over the past nine months to close the last trading session at $22.51.
SCHH’s POWR Ratings reflect its promising prospects. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system.
SCHH has an A grade for Buy & Hold and Trade. In the Real Estate ETFs group, it is ranked #3. Click here to access all of SCHH’s POWR Ratings.
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SCHH shares were trading at $22.49 per share on Monday afternoon, up $0.01 (+0.04%). Year-to-date, SCHH has gained 10.24%, versus a 18.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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