REIT Sectors From The Lens Of Dividend Investor

The aim for this article is to determine A) how attractive dividend yields offered by REITs are compared to the historical average and to the average S&P 500 company, B) the provided yields across various REIT sectors, and C) which particular sector could be considered the best pick for dividend oriented investors.
Before jumping right to the analysis, I would like to stress that viewing investments on a total return basis is of paramount importance rather than just picking some asset based on its provided dividend yield. By constraining the investment basket to just dividend yields, the probability of getting the best expected return per unit of risk is significantly lower.
However, I still consider this approach relevant, especially for such asset class as REIT:
First of all, for REITs the portion of total returns is heavily skewed towards returns stemming from dividends. The capital appreciation and stock buybacks, compared to most other stocks, account for relatively smaller portion of the total returns, since REITs have to pay out at least 90% of their net profits. So assessing the dividend aspect for REIT is more appropriate than for other types of stocks. There are truly few individuals, who are able to invest without any behavioral biases. Personally, I have never talked with someone who strictly follows mean-variance-optimized portfolio and who is constantly evaluating its risk aversion coefficient to be incorporated constructing the right efficient frontier.... Read more