| All other things being equal, higher interest rates are bad for REITs. That increases their borrowing costs which reduces profit margin. However, all other things are not equal. Demand for most forms of real estate is soaring, driving up property values. That makes it easier for REIT sponsors to borrow money at preferred rates. In fact, some REITs actually profit from higher interest rates. That's because they have rent escalation clauses written into their lease agreements. If rates rise, the tenant pays more rent even if the REIT's borrowing costs are fixed. Now might be a particularly opportune time to buy REITs. Last year, the coronavirus pandemic shut down offices, restaurants, and stores. Wall Street feared that they would not be able to pay their rent, in which case the REITs that owned those properties would lose valuable income. That did happen to many mortgage REITs that own loans instead of property. But most equity REITs have weathered the storm quite well. And now that the economy is heating up, the worst should be behind them. I expect REITs to perform considerably better this year than in 2020. Last year, REITs were the second-poorest performing sector of the 11 S&P 500 categories with an average return of -2.2%. In 2010, REITs were the best performing sector category. That was the year after the stock market bottomed during the throes of the Great Recession. Could 2021 be a repeat of that year? Ride the Tide I last wrote about REITs in this space a year ago. At that time, I noted that the SPDR Dow Jones REIT ETF (RWR) had fallen 38% in less than a month. Since then, RWR has rallied 50% but is still below its pre-coronavirus pandemic level. That's because growth stocks got most of the attention last year. Who cares about a 7% dividend yield when Tesla (NSDQ: TSLA) is appreciating 700%? Suddenly, a lot of people care about dividends. That's because growth stocks are beginning to buckle under the inflationary implications of rising interest rates. It did not take long for the stock market to adjust. Since peaking at $900 on January 25, TSLA closed last week near $675. And after hitting a record high on February 12, the tech-heavy NASDAQ Composite Index plunged 7% over the next two weeks. It appears that the tide is turning in favor of dividend stocks. For income investors, that means equity REITs should be one of the best ways to obtain high yields. Editor's Note: Jim Pearce just provided you with invaluable investing advice, especially if your focus is on high income. There's another way to generate steady income. Consider the advice of Amber Hestla, chief investment strategist of the trading services Income Trader, Profit Amplifier, Maximum Income, and Precision Pot Trader. Amber isn't just a veteran of Wall Street. She's also the veteran of a shooting war in the Middle East. She served in Operation Iraqi Freedom. While deployed overseas with military intelligence, she learned the importance of interpreting data to forecast what is likely to happen in the future. Right now, as an investment analyst in the civilian world, Amber wants to send you a brand new P.I.N. that gives you a shot at instant cash. This number will work so steadily every week, you'll begin to think of its payout as an extra paycheck. This number isn't a weird ticker symbol for a dividend stock, nor an international phone number for how to buy gold bars. To learn the specifics on how Amber's P.I.N. works, click here now. | 
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