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.
DRiP Investing also cites "dividend contenders" as companies that have paid and increased dividends for 10 to 24 years in a row. DRiP Investing lists 212 "contenders" and the following eight are REITs: National Retail Properties ( NNN - Get Report), Tanger Factory Outlets ( SKT - Get Report), Essex Property Trust ( ESS - Get Report), Realty Income ( O - Get Report), Urstadt Biddle Properties ( UBA - Get Report), WP Carey ( WPC - Get Report), National Health Investors ( NHI - Get Report) and Omega Healthcare Investors ( OHI - Get Report). In my opinion, intelligent investors should consider REITs as a core food group. Because of the attractive dividends, the power of compounding offers an optimal investment model rooted by a disciplined practice that forces REIT investors to defend against what Ben Graham described as "squandering and squirreling" away of precious cash flow. That means that your money is always working hard for you and "that most persuasive test of high-quality" is simply an "uninterrupted record of dividend payments." In conclusion, REITs are becoming increasingly main-stream and that's why they deserve to be more than a snack food but instead a "sleep well at night" alternative that is powered by the "breakfast of champions" known as increasing dividends.
At the time of publication the author held positions in O, ARCP, STAG, CSG, GPT, VTR, HTA, UMH, ROIC, DLR. Follow @swan_investor This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.