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Unveiling the Gems: RQI – The Big-Yield Portfolio Gamechanger

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Houses of different size with different value on stacks of coins. Concept of property, mortgage and real estate investment.

The Duel of Investments

If you are on the trail for a monstrous-yield portfolio, perhaps aiming for 8% to 10% consolidated yield, you’ve likely dabbled in various categories such as real estate investment trusts (β€œREITs”) and Business Development Companies (β€œBDCs”). Both factions yield generously, although BDCs generally triumph in this domain. Both also exhibit potential for long-term appreciation, although REITs currently occupy a slightly β€œcontrarian” position. In this exposΓ©, we delve into an exceptionally appealing REIT closed-end fund known as the Cohen & Steers Quality Income Realty Fund (RQI), which presents the tantalizingly contrarian opportunity of a REIT, and the opulent yield akin to that of a BDC. After scrutinizing RQI in detail – evaluating its strategy, distribution, leverage, price, and perils, we culminate with insights into how we are assimilating it into our exclusive β€œHigh Income NOW” portfolio. Furthermore, we extend our advice on why others might want to contemplate REITs versus BDCs and CEFs, particularly within the current market cycle.

The Great Divide: REITs Versus BDCs

REITs and BDCs are built on fundamentally distinct business models. Most REITs own real estate leased to tenants, while BDCs predominantly extend loans to small businesses. However, they both captivate the attention of income-minded investors due to their hefty dividends, largely attributable to their ability to circumvent corporate income taxes by channeling the majority of their earnings to investors in the form of dividends. Both contingents have been significantly impacted by rising interest rates, albeit in differing ways. Escalating rates tend to impede the economy, rendering it more arduous for many REIT tenants to meet their rent obligations, as well as making it challenging for numerous BDC loan beneficiaries to repay their loans. For a better grasp of the two groups, here’s a scoop on top individual REITs and BDCs, encompassing dividend yields, price performance, as well as valuation metrics.

The Brigade of 40+ Big Yield BDCs

The Legion of 100+ Big Yield REITs

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