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REITs (or real estate investment trusts) are the gift that keeps on giving.
In a world of historically low interest rates, high-dividend REITs have been extremely popular.
Last year, REITs soared along with the rest of the market. And they also offered much higher dividend yields than other asset classes.
It's impossible to predict what the markets will do in 2020, but collecting solid dividend payments will continue to be a winning strategy.
After all, it will be tough for the markets to repeat the near 30% gains of 2019.
There is always a chance the market pulls back in 2020, so why not take what is essentially guaranteed returns with high-paying dividend REITs?
Most prognosticators are expecting single-digit returns this year. Adding a dividend of 5% or higher is the simplest way to reach double-digit gains this year.
More importantly, high-yield dividends can help offset any declines.
With markets trading near all-time highs, there is a very real risk of loss across multiple sectors. But that risk is much lower with REITs.
And in most cases, the worst-case scenario is you sit back and collect your dividend.
It may not be as exciting a market as last year, but sometimes you just have to take what the market gives.
With that in mind, here are the five top REITs to keep an eye on in 2020...
Top REITs to Buy in 2020, No. 5
I expect we'll see a "celebration of the consumer" this year. The jobs market continues to be red-hot in the United States, which bodes well for consumer spending.
The U.S. consumer-based economy should get a nice boost in 2020. That bodes well for hotel REIT Xenia Hotels & Resorts Inc. (NYSE: XHR).
In addition to the 5.02% dividend yield, analysts expect Xenia to grow profits by 24% next year.
This one should offer double-digit gains for 2020, no problem.
Top REITs to Buy in 2020, No. 4
Slow and steady will be the name of the game in 2020. That means diversification.
While most REITs focus on one particular type of real estate, Washington REIT (NYSE: WRE) owns property in the office, retail, and multifamily segments.
The 47 properties owned by the trust offer steady cash flows that currently pay investors a 4.16% dividend.
2019 was a challenging year for Washington, as the company is on track to make only a small profit of $0.06 per share. But in 2020, that number jumps to $0.28 per share.
Investors today can expect Washington to deliver or perhaps even increase its dividend next year with strong underlying economic conditions that are currently expected.