Our Top REIT Pays 8% and Could Double in Value in 2020

Investors understanding basic supply and demand economics often make the most money in the market. It's really not that complicated.

When demand rises for a product with low supply, prices will rise.

Another term for these conditions is inflation.

Now, all the buzz today on inflation relates to the lack of it. No inflation or worse, deflation, implies economic contraction.

Those conditions explain why interest rates have collapsed around the world. It's why the yield curve inverted in the United States and why so many investors are uncertain about the future.

An inverted yield curve is nearly foolproof in predicting a recession. However, it can't predict when that recession will occur.

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What if the inverted yield curve was wrong and a recession was not forthcoming?

All of the angst in the market would be for naught, except for the opportunity it presents to investors today.

Historically low interest rates should persist, meaning investors will continue looking for yield wherever they can get it.

Like I said earlier, more buyers of a product in low supply will drive prices...

In today's market, the items in most demand are real estate investment trusts, or REITs. Especially those top REITs that pay huge dividends and have significant upside.

But investors shouldn't simply buy any REIT just for the sake of buying it.

Not all REITs are created equally. Some are better than others.

My suggestion is to focus on supply and demand when making your buying decisions.

REITs in an underlying industry experiencing inflationary conditions are the ones to target aggressively.

Here's our top REIT that fits that description perfectly...

The Top REIT to Buy Today Could Double Your Money

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At the moment one of the most attractive sectors for REITs is hospitality.

Now, hotels owned by REITs are sensitive to the economy.

If the perception is that the economy is weak or going to be weak, lodging REITs will suffer.

Many of them are being largely ignored.

Shares of Apple Hospitality REIT Inc. (NYSE: APLE) should be soaring.

The dividend yield paid by the company is nearly 8%.

In this market, REITs with that sort of dividend have appreciated greatly.

That's not the case with Apple.

Shares have been stuck in neutral over the last six months, but not in a straight line.

As fears of recession soared during the summer, shares of Apple Hospitality dropped.

Funny thing about fears... they rarely materialize.

In the second quarter, GDP in the United States was a rock solid 2%.

At a time of disruption, with trade wars and a decline in global economic activity, the U.S. economy stood strong.

For any investor looking forward, the future is bright.

Removing the noise of the trade war with China in particular could add a quarter to one half percentage point to GDP.

That's hardly recessionary.

As for global conditions, central banks are cutting rates and priming the pump with monetary policy that will be conducive to growth, not contraction.

Sure it might take time for all that stimulus to do its job, but supply and demand always works. It is an absolute.

More economic growth (or even the optimism of it) will jumpstart demand for a REIT like Apple Hospitality.

The bond market is not likely to be as easily swayed. Moving interest rates higher on real inflation concerns will be a monumental task, something akin to steering the Titanic.

So we have a unique opportunity with Apple Hospitality.

The company is expected to make $0.83 per share this year and $0.84 per share in 2020.

That 8% dividend is about as safe as can be.

With interest rates still abnormally low, investors will come in droves to buy shares of Apple Hospitality.

A double from current levels is entirely possible if my scenario plays out.

With shares of Apple Hospitality trading for only 19 times current year estimated earnings the fundamentals of the stock are appealing today.

But this story is not about fundamentals.

The story is about supply and demand and anticipating a brighter future down the road, economically speaking.

The fear of the opposite creates an investment opportunity for REITs like Apple Hospitality.

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