This week, the Federal Reserve basically announced that inflation is dead.
In a policy statement after its most recent meeting, the central bank essentially dismissed any idea of a future rate hike in the current environment.
It's a smart move.
Ever since the financial crisis, the sharp decline in interest rates (including quantitative easing) has redefined the meaning of "normal" interest rate policy.
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This has killed savers, who have longed for rate hikes in a return to the good old days.
In 2018, the Fed embarked on a series of normalization moves, assuming that the strong economy merited a removal of easy money policy.
It was wrong.
There is a new normal in town. And the market made sure the central bank acknowledged that reality when the S&P 500 dropped 15% last December.
The final blow for these normalization moves was the inversion of the yield curve multiple times in 2019.
Plummeting long-term bond yields made it very clear that raising invest rates was a bad, bad idea.
To his credit, U.S. Federal Reserve Chair Jeremy Powell quickly reversed course. He pivoted to a rate-cutting cycle that was defined as a mid-cycle move.
Now, three rate cuts later, we get a policy statement that defines the world for what it is - heavily weighted toward deflation, not inflation.
The technological revolution we're seeing now allows companies to pass along cost savings to the consumer in the form of lower prices.
Competition is such that raising prices is nearly impossible.
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Now that the Fed is on board with the "new normal," investors need to change the playbook.
If inflation is dead, the 2019 stock market rally might be due for a correction.
Where is the opportunity then?
Without a doubt, the answer is the real estate investment trust (REIT) market.
Investing in REITs has the double benefit of stock appreciation combined with income.
In most cases, that income doubles or even triples the going rate in the bond market.
Why there hasn't been a flood of cash into REITs is beyond me.
In the day after the Fed's last policy statement, the overall market dropped while REITs stood pat. Some even appreciated in value.
If you don't own REITs in your portfolio today, especially in your search for income, you should.
This week, the Money Morning Stock VQScore™ system unveiled another REIT to buy now. And this one pays a solid dividend over 5%.
That yield is in the sweet spot of the type of REIT I would be targeting - not too high and not too low.
This is the top REIT to buy now...
The Top REIT to Buy in November 2019
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Brandywine Realty Trust (NYSE: BDN) is a REIT operating in an economy that is stable and growing.
The Fed said this week that it's not likely it'll lower rates further from here.
The reason is that the economy is still in good shape.
Here's why that matters for BDN...
Brandywine is an owner of office buildings in key markets including Philadelphia, Washington, D.C., and Austin.
A perusal of its real estate portfolio shows a company with properties that are near capacity.
Sure, there are empty units here and there, but those spaces will likely be filled as the economy chugs along.
At the moment, Brandywine pays a 5% dividend. That's huge, considering that long-term government rates are falling.
Analysts expect Brandywine to earn $0.14 per share this year and next.
Investors should take comfort in that stability. It means the 5% dividend should be safe and secure.
On the appreciation side, the company will likely attract investors for the foreseeable future as we appear to be on a one way trip to lower interest rates across the board.
REITs really are the only alternative in this environment. And Brandywine is this week's top REIT with a solid dividend.
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