thefed said:
What more needs to be appealing other than the yield and growth? I dont totally understand 10ks, 10q's, and proxies. I can and will delve into them before i make a decision, but i found these based on other criteria...namely yield and pps trend.
And pardon my french, but WTF is a detailed excel model detailing cash flow? shouldnt they do something like that and present it in a prospectus or something?
Fed,
You're doing what most of us posters have done in the past-- walking onto a used-car lot, waving your credit card at the salesman, and asking "Whattya got that looks good?"
First, you haven't discussed how these fit into your time horizon and your asset allocation. If you're planning to sit on this for a decade or so then you'll probably make money on it. If you're riding the momentum then you'll also possibly make money on it, but trading requires much more knowledge & work than most are willing to acquire & do.
Let's assume that you've decided to put about 10% of your investment portfolio into REITs and hold it long enough for it to perform. If you do so, perhaps diversification among that asset class is better obtained by buying into a mutual fund or ETF. You're doing the equivalent of buying a single stock. Diversifying away the single-stock risk requires a minimum of 20 and perhaps as many as 50 stocks.
You've identified that these two have a good yield and their price is moving up, but both can be for a variety of reasons that have nothing to do with making money. Many sucky companies have a high yield because their share price has cratered and they haven't cut their dividend yet, which used to be the situation with GM. Other high yields may be due to deliberately paying out a lot of dividends to attract investors (and to enrich their major stockholders) while starving the company of the cash it needs to perform & grow. Price movement can be due to great financial performance or it can be due to various speculators buying shares, talking up the stock, and dumping them.
The basic language of stocks is the 10Ks/10Qs that Brewer alluded to. That's where you find the company's financial performance and how it's making its money. The "prospectus" isn't much more than the advertising sign over the used car lot.
Some companies do show how their cash flow will grow, as do many analysts. However very few of them have shown to be accurate enough to trust. Some ratings firms track analysts or newsletters and their long-term accuracy. However the vast majority of the analyst industry consists of opinions backed up by data-mined numbers.
Guys like you asking questions like that in a used-car lot get fleeced. In the investing world it's just as bad. Brewer's recommended some great texts, and there are also more popular guides like Investopedia.com and The Motley Fool's books. Those are the basics of looking for good companies, but that basic skill can only be improved by more studying & experience. It can be done but it's not as easy as it looks, which is why the vast majority of investors do it with mutual funds & ETFs. Even guys like Brewer who build spreadsheet models for a paycheck have been taken to the cleaners by the occasional single-stock "surprise".
On the technical side, I see LXP as a REIT that's had a good run up but has been steadily losing ground over the last year, which is why yield is now so high. There's a reason for the price drop and the recent rise hasn't really gone anywhere. If they cut their dividend then the price will drop even faster/further. So if it's such a good REIT, why has its price been dropping when assets should be getting more valuable and rents should be going up? There are reasons for the price movement but neither one of us knows why. However I'm not planning to buy it...
OHI looks like it's had a good long run and is starting to peter out. Again it may be fully priced and you may be jumping in just as it starts a similar decline. Again there's a reason but that hasn't been analyzed adequately enough for me to trust my money in there.
? An accumulator vs someone in ER - aka distribution phase would have different ideas. Why you own something is - in my mind - as important as what you own.
