Randy Schmidt, an Investment Centers of America advisor who works at the ChoiceOne Bank in Kent City, Mich., got burned in the dotcom bust 10 years ago, so when real estate went wild in 2007, he steered clear of the sector and avoided the damage when property stocks and real estate investment trusts (REITs) crashed. Many REITs eliminated their dividend payouts altogether.
Yet this year, Schmidt has become a big fan of the sector—at least selectively. "We've got about 25% of our clients in REITs," he says. "Once I explain that we're not investing in more speculative, volatile REITs, but ones that have a good prospect for steady income of say 5% to 7% and growth in line with inflation, I get very little push-back." Schmidt prefers hospital and office building REITs with high occupancy rates.
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