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There's no doubt that 2019 was the year of the REIT.
Three Federal Reserve rate cuts have left interest rates incredibly low, between 1.5% and 1.75% as we head toward 2020.
Any REIT with stable cash flow was bought and bought hard in 2019.
Who wouldn't buy a REIT yielding 5% or more with rates so low?
Honestly, I'm surprised REITs didn't explode even higher than they did this year. Yields compared to the rest of the market were that attractive.
Like tech stocks in the last 1990s, REIT investors could essentially blindly throw a dart and succeed in 2019.
Things won't be as easy in 2020, which is why investors will want to use caution when picking REITs next year.
Our top REIT for 2020 could climb to five times its current price, and shares yield a solid 7.9%. Click here to get the Best REIT to Buy for 2020…
Just because a REIT has a huge dividend is not a reason to buy. That's always the case, but it will be especially true next year.
Those big dividends may distract from underlying issues that could erode share value.
After all, what good is a large dividend if the share price drops?
Take for example CBL & Associates Properties Inc. (NYSE: CBL). This mall-based retail REIT traded for more than $25 per share five years ago.
Today, CBL trades near $1 per share and is likely headed to $0. No one wants a dud like that in their portfolio to start the new year.
While there may not be a CBL landmine in the market today, there is risk as we head into 2020.
In a market chock full of high-yielding alternatives, the best advice is to buy with as little risk as possible and avoid the REITs that bring the most danger.
Here are three popular REITs I would avoid now…