By: Dividend Sensei
Well perhaps not for the regular stock market which has remained flat this week, but if you are an energy or REIT investor than I’m sure you’ve notice the absolute drubbing we’ve seen in the last two days.
For energy that’s simply due to oil prices crashing 15% in the last 3 weeks, including 5% today. That’s due to renewed concerns over the global crude supply glut. US shale producers, especially in the prolific and low cost Permian basin have surprised the world’s energy traders with how quickly they have ramped up drilling and production, even at relatively low crude prices.
Meanwhile REITs, especially retail REITs got slammed by a one two punch. First, Spirit Realty (SRC) announced terrible results due to tennant credit problems, lowering guidance and sending all retail and triple net lease REITs plunging on renewed concerns over the retail recession.
In addition, today’s report that productivity declined by 0.6% in Q1, while employment costs grew 3% YoY sent interest rates spiking 5 basis points because it means that despite slow economic growth, stronger inflation concerns could cause the Fed to keep raising rates.
Then on the health REIT side of things, the passing of the Republican healthcare bill has increased uncertainty about how potential changes to Medicare/Medicaid spending might affect the already struggling skilled nursing facility or SNF industry.
Of course, long-term investors such as myself actually love days like today. Despite a 4% loss in my real money portfolio (worst one yet) I was able to gorge on plenty of high-yield REIT and MLP goodness and raise my yield on cost to an all time high of 6.6%.
Which just goes to show that, even now, with the market trading at near all time highs, there are plenty of great undervalued, high-yield, dividend growth names to enjoy…as long as you are willing to take the long-view, and have the courage to adopt a value focused, contrarian mind set.