2 High-Dividend Stocks That Are Screaming Buys in August
Real estate investment trusts, or REITs, are one of the most interest-rate-sensitive groups of stocks in the entire market. This is the primary reason that while the S&P 500 has rebounded by 46% since the end of 2022, the Vanguard Real Estate ETF (NYSEMKT: VNQ) has only managed a 19% total return since then.
In simple terms, rising interest rates tend to put downward pressure on REITs. Not only are income-focused stocks less appealing when risk-free instruments like Treasury securities and CDs have higher yields, but real estate stocks tend to rely more on borrowed money than most other sectors, and higher interest rates mean more expensive borrowing costs.
Having said that, the Federal Reserve is finally expected to start cutting interest rates at its September meeting, and the median expectation is for a total of 2.25 percentage points in interest rate cuts between now and next September. This could create a big catalyst for REITs to outperform the market, and there are two in particular I consider worth buying this month.
Source Fool.com
