NEW YORK (TheStreet) -- Investors know that companies that provide sharper product differentiation enjoy a greater advantage and, in turn, provide a higher degree of sustainability. Of course there are plenty of alternative income products on the market today and the most successful companies have been able to achieve consistency by utilizing the most innovative forms of risk-control.
But what does innovation have to do with consistent income? After all, we have all seen (AAPL) Apple's (AAPL) highly innovative platform bounce around and drop by 36% wiping out around $225 billion in market. Ahh, but wait. Apple's volatility doesn't make up for the meager 2.4% dividend yield -- hardly a dividend champion.
And of course Facebook (FB) with its highly innovative platform pays no dividend at all. Ouch! So how does a fixed-income investor find an alternative that provides durable dividends that are driven by innovatively crafted products?
REITs Provide a True Measure of Dividend Repeatability
There are plenty of alternative income options today and the real estate investment trusts provide a uniquely sustainable platform where consistency is measured by extraordinary risk control. Accordingly, the success or failure of a REIT is directly correlated to providing strong sources of differentiation yielding greater strategic advantage. Chris Zook, co-author of "Repeatability: Building Enduring Businesses for a World of Constant Change," explains:
Differentiation is the essence of strategy, the prime source of competitive advantage. You earn money not just by performing a valuable task but by being different from your competitors in a manner that lets you serve your core customers better and more profitably.We all know REITs are a unique asset class. The primary attraction being the fact that there are no options for companies to pay, or not to pay, a dividend, since by law, REITs are forced to pay out at least 90% of their otherwise taxable income. The dividends that REIT investors receive out of earnings haven't been reduced by taxes at the corporate level, making REITs tax-efficient conduits for real estate income. Simply said, REITs are forced to do so to retain their REIT status.
Find a REIT that has a Highly Innovative Operating PlatformToday we are seeing an evolution in REITs in which companies that were once just landlords are now becoming more than that. We have found that to remain truly competitive REITs must be strategically-aligned risk-managers where the companies demonstrate both sound shareholder value and tenant value. In other words, REITs today must make innovation a core attribute.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV