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REITs on The Street: The Breakfast of Champions

Stocks in this article: FRT HCP UHT NNN SKT ESS O UBA WPC NHI OHI

NEW YORK ( TheStreet) -- When it comes to investing, it's always good to keep your portfolio fit and to avoid indulging in too many risky alternatives. That means that you should stay away from the more speculative asset sectors and maintain focus on the most important financial fitness goal: Protecting your principal at all costs.

Accordingly, it's always wise to begin your day with a purpose -- or a goal -- in which you aim to create a consistent routine. By maintaining a repeatable investment strategy you will wake up every day feeling like you're fueling your piggy bank with the "breakfast of champions".

One of the better ways to protect your all-important "nest egg" and to maintain this disciplined routine is to utilize one of the most powerful investment laws in the universe -- the power of compounding. Simply put, this compounding concept refers to re-investment of income to consistently grow your principal over time. When asked to name the greatest invention in human history, Albert Einstein replied "compound interest." Essentially the "law of compounding" is kind of like a free ATM machine where instead of withdrawing free cash (from the ATM), you are instead buying more stock with the income derived from your dividends.

REITs are Excellent Compounding Alternatives

REITs are unique to most other asset classes since they are "forced" to payout high-dividends. More than 50 years ago (1960) Congress created the REIT laws that made it a requirement for companies (that qualify as a REIT) to distribute at least 90% of their taxable income in the form of dividends.

By investing in REITs, the power of compounding can reap significant rewards in a manner in which durable dividend income can grow exponentially to create amazing wealth. Conversely, there are a few select REITs that have made it to the "top shelf," recognized for their attractive consistency and long-term sustainability.

The Dividend Champions

As defined by DRiP Investing Resource Center a "dividend champion" is a stock that has paid and increased dividends for 25 years or more in a row. According to DRiP Investing there are 105 companies that are considered to be dividend champions and three of these are REITs. Federal Realty (FRT - Get Report), HCP (HCP - Get Report) and Universal Health Realty (UHT - Get Report) are all recognized for their extraordinary consistency and reliability in paying dividends.

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