A REIT provides natural protection against inflation.
Real estate rents and values tend to increase when prices do. This supports REIT dividend growth and provides a reliable stream of income even during inflationary periods.
Most REITs operate along a straightforward and easily understandable business model: By leasing space and collecting rent on its real estate, a REIT generates income which is then paid out to shareholders in the form of dividends. REITs must pay out at least 90 % of their taxable income to shareholders—and most pay out 100 %. In turn, shareholders pay the income taxes on those dividends.
For this reason, we typically trade these investments in a tax deferred account like an IRA.
Life Storage REIT
Life Storage, Inc.(LSI) cleared an important technical benchmark this week, as its Relative Strength (RS) Rating jump into the 80-plus percentile with an improvement to 86, up from 84 to start the week.
The company is a self-administered and self-managed equity REIT that is in the business of acquiring and managing self-storage facilities.
On August 3, Life Storage (LSI) reported Q2 earnings of $1.65 per share on revenue of $257.0 million handily beating the consensus earnings estimate of $1.53 per share on revenue of $242.9 million. Revenue grew 37.3% on a year-over-year basis.
LSI differentiates itself from other Storage REITs by means of several innovations:
The Company operates more than 1,100 locations in 36 states. An industry leader in innovative technology, Life Storage recently launched “Rent Now,” a fully-digital rental platform allowing customers to self-serve and “skip the counter” by completing the rental transaction online. The Company is also redefining the way corporate customers utilize self storage by being the first to offer an intelligent warehousing solution through its subsidiary, Warehouse Anywhere. Warehouse Anywhere seeks to help solve the last mile delivery challenge of its corporate customers through a forward deployed, unmanned, decentralized model combining self storage asset management with propriety inventory tracking technology. – Life Storage Inc.
REITs historically have delivered competitive total returns, based on high, steady dividend income and long-term capital appreciation. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. These are the characteristics of REIT-based real estate investment.
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