This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

REITs on The Street: Triple Net REITs

Stocks in this article: O WPC NNN

NEW YORK ( TheStreet) -- In late May the Federal Reserve began to prepare the markets for an impending pullback in the central bank's stimulus program. It became apparent that the sell-off in REIT-dom was getting baked. Although Uncle Ben Bernanke's announcement (in late May) indicated an overall uptick in the U.S. financial system, several industries became overheated.

Among those were the Triple Net REITs. It seemed rather ironic the "bond-like" asset class would be affected the hardest since they are supposed to be the safest and most reliable dividend payers. After all, interest rates won't be rising any time soon and Mr. Market seemed to jumping the gun in haste because the tapering is not supposed to take place until 2014 or possibly 2015.

Looking back to 2010, Mr. Market was begging investors to consider the Triple Net REITs since they offered comparatively higher yields; however, now the free-standing specialty REIT sector is under attack for doing precisely what Mr. Market wanted -- providing stable and growing dividends.

In today's turbulent market, net-leased real estate investments represent a stable alternative to the fluctuating stock and bond markets. Premier net lease properties -- those with favorable lease terms, a strong tenant credit and prime location - are among the most sought-after properties. Investors are most attracted to the stable, bond-like structure offered by net leases and the resilience to the recession-proof model.

But clearly, Mr. Market does not acknowledge the "standalone" REIT sub-sector as a stable real estate alternative. Instead, he has opted to associate the stalwart REIT class with the "kissing cousins" known as bonds. Further investigation however reveals that Triple Net REITs aren't bonds. In fact, they are capable of solid growth, both internally and externally.

But we all know Mr. Market has a magic wand that gives investors a seemingly good reason to buy or to sell. Perhaps he is waving his wand inappropriately to the tapering hints and not fully appreciating the historical significance of Triple Net REIT returns, especially when the economy is strengthening.

For example, WP Carey (WPC), Realty Income (O) and National Retail Properties (NNN) -- all known for their reliable and growing dividends -- have never cut an annual dividend. In fact, all three of these REITs have increased annual dividends every single year (or as long as they have been publicly traded).

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,790.90 +12.75 0.07%
S&P 500 2,066.68 +5.45 0.26%
NASDAQ 4,761.8450 +13.4490 0.28%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs