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Author: Reitnut Big red star, 1000 posts Top Favorite Fools Feste Award Nominee! Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77724  
Subject: Re: PSA Preferred Sets a new low yield Date: 3/10/2013 7:15 PM
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Sailmac says, Personally, I'd rather have a 3.5% dividend yield and growth than a 7% but no growth and the inflation risk that comes along with that.

This is an entirely logical decision, and I certainly sympathize with it. As I posted earlier, I am slowly but steadily redeploying much of the capital that's being returned to me via pfd redemptions (and even doing some pfd tapering) into common equities.

However, we should keep in mind that REIT pfds are very bond-like, and comparing bonds with common stocks is like comparing classical music with hip-hop. Yeah, they are both "music," much as bonds and commons are both "investments," but their differences are as great as their similarities.

So whether to concentrate one's portfolio on REIT pfds or REIT and other commons should depend on a ton of factors, including but not limited to one's risk aversion, his/her outlook for the US economy, inflation and interest rates, the investor's time horizon, and the kinds of returns one "needs" to fulfill investment objectives.

Why not own both, but in proportion based on some of the factors suggested above?

Ralph
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