Real estate investment trusts, or REITs, are usually considered income investments, so some investors panic and sell them when interest rates are rising. But the Federal Reserve’s recent change in policy should put that fear to rest.
Meanwhile, you can see that REITs have performed very well compared to the broader stock market in the long run. We list S&P 500 REITs, sorted by yield, below.
We pointed out in August that a knee-jerk reaction to avoid REITs when interest rates are rising isn’t supported by performance. A rising-rate environment is typically one that also features significant economic growth, which means a REITs’ rental income and earnings will rise. This tends to offset negative price action from rising rates.