What sort of income can you generate with a REIT?

Linton

NedS said:

AP3 said:

Hello All,

I have some savings that aren't doing much for me in an ISA, and I'd thought about buying a property and renting it out, but obviously that comes with some risk.

Then I read about REITs which seem like a hand-off way of getting a monthly income (which is what I'm after).

I can't find any examples of how much people are earning monthly based on the amount they have invested. Would any one have an idea of how much you could expect in monthly income from a £200k investment? Obviously it would depend on the fund, but a very ballpark figure would be much appreciated.

Cheers,
Andy

With £200k, I would look to build a diversified portfolio of income producing assets, at which point I think 5% is readily achievable.

In addition to REITs (I hold CSH and THRL), I would also consider renewables (solar, wind, battery storage etc) which are all paying strong dividends, conventional equity (plenty of quality dividend stocks in FTSE100, plus Investment Trusts such as CTY which give instant diversification), and corporate bonds/debt. Building a diversified portfolio will help reduce volatility and risk whilst giving diversified stream of income. My income portfolio currently has a yield of 6.25%, so an income of around £12,500 for your £200k

Trustnet is useful for screening suitable REITs and other trusts:

https://www.trustnet.com/fund/price-performance/t/investment-trusts?sector=&tab=fundOverview&pageSize=25&IsTrustnetITSpecialistVct=false

I do much the same, with much the same figures.  However I would suggest that greater diversification outside the UK is beneficial.  For example SE Asia can produce good dividends as can Europe (suggest you have a look at the European Assets Trust) .  Also you can get dividends out of the US through the use of infrastructure funds.

Thrugelmir

Linton said:

NedS said:

AP3 said:

Hello All,

I have some savings that aren't doing much for me in an ISA, and I'd thought about buying a property and renting it out, but obviously that comes with some risk.

Then I read about REITs which seem like a hand-off way of getting a monthly income (which is what I'm after).

I can't find any examples of how much people are earning monthly based on the amount they have invested. Would any one have an idea of how much you could expect in monthly income from a £200k investment? Obviously it would depend on the fund, but a very ballpark figure would be much appreciated.

Cheers,
Andy

With £200k, I would look to build a diversified portfolio of income producing assets, at which point I think 5% is readily achievable.

In addition to REITs (I hold CSH and THRL), I would also consider renewables (solar, wind, battery storage etc) which are all paying strong dividends, conventional equity (plenty of quality dividend stocks in FTSE100, plus Investment Trusts such as CTY which give instant diversification), and corporate bonds/debt. Building a diversified portfolio will help reduce volatility and risk whilst giving diversified stream of income. My income portfolio currently has a yield of 6.25%, so an income of around £12,500 for your £200k

Trustnet is useful for screening suitable REITs and other trusts:

https://www.trustnet.com/fund/price-performance/t/investment-trusts?sector=&tab=fundOverview&pageSize=25&IsTrustnetITSpecialistVct=false

  For example SE Asia can produce good dividends as can Europe (suggest you have a look at the European Assets Trust) .  

Many investment companies distribute from capital reserves as well. Never wise to assume that the underlying payment is covered by revenue generated. 

Recently been major questions over CSH's business model. 

Many alternative investments currently trade at significant premiums. The income now generated may well be at the expense of future capital loss. Worth getting on at the ground floor when the companies first list. 

NedS

Thrugelmir said:

Recently been major questions over CSH's business model. 

Which have been answered last week and is priced in. The current 20% discount combined with 6.3% yield may represent an attractive entry point, or not depending upon your point of view. Management clearly think this represents value for money given they are taking the opportunity to buy back their own shares.

Thrugelmir

NedS said:

Thrugelmir said:

Recently been major questions over CSH's business model. 

Which have been answered last week and is priced in. The current 20% discount combined with 6.3% yield may represent an attractive entry point, or not depending upon your point of view. Management clearly think this represents value for money given they are taking the opportunity to buy back their own shares.

The review by regulators into a number of CSH's providers has been pretty damming. The regulators next steps have yet to be determined. Leaves longer term questions unanswered. 

Quality of management is one of my key criteria. When I lose confidence I sell. As normally have other opportunties on my watchlist. 

Moe_The_Bartender

AP3 said:

george4064 said:

1. Go to a website which lists investment trusts/ETFs, e.g. https://www.hl.co.uk/shares/investment-trusts
2. Filter for REITs
3. Find out what their yields are
4. Multiply your investment in REITs by the yields, that is your estimated annual dividend income*

*dividend levels vary and are not guaranteed, capital is at risk and you may get back less than you invest.

Before you invest, make sure you thoroughly ready through what the REIT is actually invested in as they can vary hugely. Some are quite diversified whilst others are very concentrated in specific sectors such as supermarkets or warehouses.

On a wider note, if you are investing for income you should look to various sources of income rather than piling into a REIT/a handful of REITs. Even if you hold diversified REITs, you’re still making a conscious decision to exclude a huge part of the investable world (equities, infrastructure, bonds to name a few…)

Thanks George. The yields don't look very inviting!

Are there better ways of generating a monthly income? That's really what I'm after, along with trying to keep my capital safe.

Cheers,
Andy

This may be of interest:

https://www.fundslibrary.co.uk/FundsLibrary.DataRetrieval/Documents.aspx/?type=packet_fund_class_doc_factsheet_private&id=e3acd0b2-63dd-4808-8978-2848fc457886&user=3IIabVoqrbFLSw9fkWWBG2CaTxfKNM6KY%2bMMISqKRyqopNO5mrTTR4aYgNUYvM6A&r=1

It invests in a range of different asset types (property, royalties, infrastructure and debt) and income is paid out monthly.