The SPDR Dow Jones REIT ETF (RWR), launched in April 2001, has historically outperformed the S&P 500, delivering an 8.5% annualized total return compared to 7.7% for the S&P 500 ETF (SPY) from 2001 to 2020. However, since the pandemic in 2020, REITs have lagged, averaging a 5.7% annualized gain over the last five years, significantly lower than their previous performances.
Currently, the Cohen & Steers REIT and Preferred Income Fund (RNP) offers a 7.9% yield and has returned around 30% over the last five years, mostly through cash distributions. In contrast, the Principal Real Estate Income Fund (PGZ) has seen only an 11% return in the same timeframe, highlighting its struggle due to past performance failures.
Market dynamics are shifting, with REITs poised for potential recovery as real estate demand increases despite rising interest rates. Investors are encouraged to consider diversification through REIT-focused closed-end funds, particularly those like RNP, which have demonstrated resilience and consistent payouts.
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