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How to Profit from Real Estate with No Stopped Up Toilet Calls

October 15, 2012
Dividends4Life

Dividends4Life

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A multitude of self-made millionaires (and billionaires) made their fortunes in real estate. Often through the development of large-scale projects such as shopping centers or planned communities. On a smaller scale, there are many landlords with one or more rental properties earning them a monthly income.

If you want to profit from real estate but don't have the initial investment for a large-scale development and don't want to deal with the daily hassles of being a landlord, then this investment is for you.

In 1960 Congress created a special investment vehicle called a Real Estate Investment Trust (REIT) as a way to make investment in large-scale, income-producing real estate accessible to all investors. REITs are bought and sold just like stocks and have become quite popular with individual investors.

According to REIT.com, as of Jan. 1, 2012, there were 166 REITs registered with the Securities and Exchange Commission in the U.S. that trade on one of the major stock exchanges — the majority on the New York Stock Exchange. These REITs have a combined equity market capitalization of $579 billion.

Since REITs don't pay income taxes they are required to distribute at least 90 percent of their taxable income to shareholders annually in the form of dividends. As you might suspect, these are usually some hefty dividends. Like other good dividend stocks, successful REITs will periodically increase their dividends.

Below are three REITs yielding over 7% that have recently increased their cash dividends to shareholders"

Hospitality Properties Trust (HPT), a real estate investment trust (REIT), engages in buying, owning and leasing hotels. Oct. 9, the company increased its quarterly dividend 4.4% to $0.47 per share. The dividend is payable to shareholders of record as of the close of business on Oct. 22, 2012, and distributed on or about Nov. 21, 2012. The yield based on the new payout is 7.9%.

Select Income REIT (SIR) is a real estate investment trust, or REIT, which owns properties that are primarily net leased to single tenants. SIR is headquartered in Newton, Mass. Oct. 9, the company increased it quarterly dividend 5% to $0.42 per share. The dividend is payable to holders of record of common shares as of the close of business on Oct. 22, 2012, and will be distributed on or about Nov. 19, 2012. The yield based on the new payout is 6.8%.

Senior Housing Properties Trust (SNH), a real estate investment trust (REIT), primarily invests in senior housing properties in the U.S. Oct. 9, the company increased its quarterly dividend 2.6% to $0.39 per share. The dividend is payable to common shareholders of record as of the close of business on Oct. 22, 2012 and distributed on or about Nov. 20, 2012. The yield based on the new payout is 7.1%.

Below are several other companies that have recently increased their cash dividends to shareholders:

Weyerhaeuser Company (WY), a forest products company, grows and harvests trees, builds homes and manufactures forest products worldwide. Oct. 11, the company increased its quarterly dividend 13% to $0.17 per share. The dividend is payable Nov. 30, 2012, to shareholders of record at the close of business Nov.9, 2012. The yield based on the new payout is 2.6%.

Enterprise Products Partners LP (EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals in the U.S. and internationally. Oct. 10, the partnership increased its quarterly distribution to $0.65 per unit. This distribution rate, which represents a 6.1 percent increase over the $0.6125 per unit. This distribution is the 33rd consecutive quarterly increase. The distribution is payable on Thursday, Nov. 8, 2012, to unitholders of record as of the close of business on Wednesday, Oct. 31, 2012. The yield based on the new payout is 4.8%.

International Paper Company (IP) operates as a paper and packaging company in North America, Europe, Latin America, Russia, Asia and north Africa. Oct. 9, the company increased its quarterly dividend 14% to $0.30 per share. The dividend is payable on Dec. 17, 2012, to holders of record at the close of business on Nov. 15, 2012. The yield based on the new payout is 3.3%.

Northwest Natural Gas Company (NWN) stores and distributes natural gas primarily in Oregon, Washington and California. Oct. 8, the company increased its quarterly dividend 2.2% to $0.455 per share. The dividend is payable Nov. 15, 2012, to shareholders of record on Oct. 31, 2012. NWN will have paid $1.79 per share in dividends on its common stock in 2012, the 57th year in which the company's dividend payments have increased. The yield based on the new payout is 3.6%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: Long SNH in my High-Yield Portfolio. See a list of all my dividend growth holdings here.

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Dividends4Life
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