Put Federal Realty in Your Shopping Cart (Correct)

(Corrects article from 10:34 a.m. ET today regarding information on company square footage and years of paying a dividend.)

NEW YORK (TheStreet) -- With little new construction in the pipeline, the decline in retail vacancies can now appropriately be called a trend towards recovery.

Rent growth has been measured, but at least follows a positive trajectory as well. While the worst may now be over for retail properties, risks remain given the fragile state of the economy as a whole.

Still, there is reason to celebrate having moved past what could well be the worst downturn for retail real estate in at least three decades.

Many retail real estate investment trusts have already announced third-quarter earnings, with more to follow and thus far, most have reported falling vacancies and growing rents.

In the shopping center sector there are 18 REITs with a combined market capitalization of $41.5 billion (as of Sept. 28) with an average dividend yield of 3.55% and the year-to-date (as of Sept. 28) total return is 24.65%.

Federal Realty: The Gold Standard

In REIT investing, the "gold standard" is measured by dividends -- not just the quantity (highest yield) but the quality. Mortgage REITs are distinguished by higher yielding dividends known for their volatility and higher risk composition; conversely, the quality of the dividend is often diluted by higher leverage (borrowing money to magnify returns) that leads to high volatility and uncertainty.

Many mortgage REITs, including Annaly Capital Management (NLY), Chimera Investments (CIM), American Capital Agency (AGNC) and Armour Residential REIT (ARR) are connected to debt-laden deals with bumpier dividend performance.

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