Drawing off of my last Watchlist I went ahead and purchased an additional 34 shares of Dream Office REIT (D.UN). I bought the shares a few days ago at a price of $26.05, which at the time had a dividend yield of 8.56% and brought the average cost of my position down to $27.56. Now, unfortunately the price of Dream shares has gone down even further to $25. So had I held off on my purchase I could have bought an additional share had I waited, but then again you can never truly know which way the market was going to go.
When I was during my further research on Dream before I purchased it, I did not see any specific news to attribute to the decrease in Dreams shares directly, especially as most of the TSX has seen several days of declining valuations in a row. Interest rates have also been held steady, and I doubt they will rise quickly when they do inevitably start to increase. Generally speaking, REIT are known to be sensitive to interest rate changes, with their share prices reacting in reverse to the interest rate changes. The upside for REITs is in the long term where higher interest rates tend to be correlated with higher inflation and thus the ability for the REITs to charge higher rates on their leases, which is necessary to cover their higher interest costs on newly issued debt which is used to finance growth.
Whether or not Dream's stock price goes up or down, I am pretty confident that the additional $6.36 in income I get from these 34 shares will keep coming. Bringing my total monthly income from Dream to $22.22, with an annual payout of $182.43 for the 119 shares.
REITs, REITs, everywhere. I am reading blog after blog, myself included that has jumped aboard the REIT train the last couple of weeks. I went into health REITs, others into retail or office space. No doubt Fed interest rate uncertainty and bond yields have spooked the sector as a whole giving us much better yield and buying opportunities. Thanks for sharing your recent pick up.
ReplyDeleteYeah, they've picked up a bit on the blog/retail investor side for sure. I think long term they will be just fine, but like you said when the Cdn/US central banks start increasing interests rates they will probably decrease in share price(so the experts say). And those rising rates will impact any floating or new bond issues the reits have, but anything locked in should be OK I figure. Thanks for stopping by again :) Cheers to those monthly deposits!
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