At its core, investing is not complicated. An asset that's attractive to buyers goes up in price. The more buyers, the higher the price will go.
End of story.
Don't make it any more complicated than that.
Put stocks in your portfolio that will attract buyers, and more often than not, you will dramatically outperform the major market indexes.
What asset is attracting buyers today?
High-yield dividend stocks are about as attractive as it gets right now. Many are yielding double or triple what historically low interest rates offer.
And when those stocks are attractively priced relative to expected earnings growth, the stock is an even better buy.
That's part of the reason why REITs have been the big winners over the past two years.
Anytime a stock can beat the market and offer a high dividend yield, investors come flocking. And these REITs have become even more attractive as interest rates continue to remain at historical lows.
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Of course, in 2019, the rising tide of the market "lifted all boats." When the broader markets return nearly 30% like they did last year, picking individual winners can seem easy.
But to be a successful REIT investor in 2020, one will have to be far more selective.
Go back to keeping things as simple as possible. Find the attractively priced asset and buy it.
Over time, others will buy it too, and that will send the share price higher.
This is already playing out for one REIT in the early days of 2020.
Shares are up double the market already, and the REIT offers an insane 11% dividend yield.
I can already see where this is leading, and I'm recommending investors looking for income buy this REIT immediately.
This Is the Top REIT to Buy in January 2020
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Specifically, I expect shares of Broadmark Realty Capital Inc. (NYSE: BRMK) to double in value over the next year or two.
The commercial-mortgage REIT is poised to ride a wave of development in the housing market thanks to a monetary policy conducive to growth.
The company also pays a dividend of 11.4% currently.
Name another stock that has the chance of doubling in value and pays you more than 11% while you wait for that happen.
Of course, there will be high demand for this stock going forward.
The earnings story is what really gives me confidence on Broadmark in 2020 though.
Analysts expect the company to grow profits by an insane 500% in 2020. That is a huge number that even without the dividend will attract buyers.
When you consider that shares trade for only 53 times 2019 expected earnings, those buyers will literally overwhelm the market for this stock.
Why the arbitrage?
The nonbelievers are still concerned the economy will fall into a recession in the near term. Naturally, that would be bad for Broadmark, since the company is dependent on providing capital for development.
That said, any hint of recession will push interest rates lower, which will keep Broadmark's huge dividend front and center.
This company is relatively new to the market, so there may be some that want the company to prove it can operate in a way the delivers results.
Will they pay the dividend? Will they lend in a way that delivers the current expected profit growth? Those are legitimate questions, but relatively superfluous.
What matters today is the short run, and all signs are positive for Broadmark.
If the current run rate in the market continues for the remainder of 2020, we could be looking at a stock that gains 20% to 30% depending on what the S&P 500 does from here.
Add in the dividend, and Broadmark is a must-own for any total return income investor looking for a REIT to buy today.
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