Dividends Boring? Try REITs
Dividend stocks rarely perform above the market, yet consistently perform at market levels. REITs are an exception:
If you think dividend-paying stocks are boring, consider this: Over the five years that ended Dec. 31, shareholders of real estate investment trusts enjoyed a 23 percent average annual return. By contrast, the market, as measured by the S&P 500 index, averaged a 1 percent annual loss during the same period.
Why choose REITs? Tax-loopholes –> high dividends:
REITs don’t pay income taxes as long as they pay at least 90 percent of their taxable income to shareholders. Because REITs don’t pay taxes, their dividends are taxed as regular income instead of at the lower 15 percent capital gains rate. So, it’s best to keep your REITs in a tax-sheltered account.