My sister questioned why would someone who is not retired, and don't need income, investing in REIT. You don't need the income!!I gave an example of me buying CTRE in 2015 for $12.08, which now has a cost basis of $11.58, has effective dividend yield of 9.16%, and I will be doing 10% on that investment just from dividend alone and any price appreciation even $1 or $2 per year can easily push my annual return over 10%.Imagine you can 10%+ with relative stability. Yet she is not convinced. But she being my sister, so she is like "I am not convinced, but going to trust you, tell me some REIT's to buy...." LOL
The dividend security is always something to watch closely, of course.The other consideration is to ALWAYS consider the current value of the investment. If the value has moved up, additional purchases through dividend reinvestment or other funds is recommended. Independent of this, the PRICE of the shares currently is always the consideration for forward returns, NOT the cost basis.That cost basis game is dangerous because is blinds us to the value of considering alternate places to put our principle.Using cost basis for the basis for dividend and capital appreciation in total returns is only helpful if we need to consider tax and inheritance events.Using the above, It would be much more appropriate to use the current pricing of $23.07 (6/24/21) and 4.5% dividend rate for calculations, not the basis.Otherwise, you would never sell as the years pass by. This is simply because you are not valuing your investment at the current market pricing (and, with additional calculation, fair value).
Otherwise, you would never sell as the years pass by.This is not a bug, but the core feature. As the stock price appreciates, and as the dividend increases overtime, the effective dividend yield increases.When you own a company for a time, you develop understanding of the business, why would you want to throw away all that knowledge and go into a new unknown business? Over the time I have learned that my internal valuation models are far aggressive and in general market multiples have expanded. I am selling early. Also, my personal situation, I have more cash than ideas.
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