AWP's 12.5% Yield Continues to Grow Retirement Portfolio Despite Unfavorable Interest Rates

Property REITs have had a strong start to 2023 despite high interest rates due to low leverage ratios. The sector's debt-to-market assets are at 32.5%, ranking it at the lower end. This has led to a stable financial position, which is favorable for retirement savings. AWP's 12.5% yield is notable, making it a promising investment option for those looking to grow their retirement portfolio.

Property REITs have demonstrated resilience in 2023, with a strong start despite high interest rates. The sector's low leverage ratios, with debt-to-market assets at 32.5%, have placed it at the lower end of the spectrum over the past two decades [1]. This stable financial position has been favorable for retirement savings.

The sector's performance is notable due to its ability to maintain steady income, even in unfavorable borrowing conditions. Despite high interest rates, almost two-thirds of public REITs reported a year-over-year increase in net operating income (NOI) and funds from operations (FFO), indicating their ability to keep pace with inflation [1].

One standout investment option is the Abrdn Global Premier Properties Fund (NYSE:AWP), which yields 12.5% and invests in a global portfolio of equity REITs. AWP maintains a sizeable international portfolio, with Japan, the U.K., Australia, and France representing approximately 23% of its assets [1]. The fund's performance has been notable, with positive NAV growth and high distribution levels, even during periods of market volatility.

Another promising option is Realty Income (O), which owns and operates 15,600 free-standing, single-tenant commercial properties in the United States and other countries. O's monthly dividend yields 5.6% annually and has a solid track record of annual dividend increases [1]. The REIT maintains ample liquidity and has an investment-grade balance sheet.

NNN REIT Inc. (NNN) is another option, with 3,641 properties and a 97.7% occupancy rate. The REIT has a 9.9-year weighted average remaining lease term and a 4.1% weighted average interest rate, providing a stable income stream [1].

For those seeking higher yields, the perpetual preferred securities from Global Net Lease, Inc. (GNL) present excellent opportunities. GNL's perpetual preferreds enjoy stronger income safety, with yields ranging from 7.25% to 8.2% [1].

Investing in REITs can provide high, steady dividend income and long-term capital appreciation, making them an excellent choice for retirement savers and retirees requiring a continuing income stream. Their stable stream of contractual rents and required dividend distribution of at least 90% of their taxable income make them an attractive investment option [2].

References:
[1] https://seekingalpha.com/article/4801910-underrated-unloved-awp-12-percent-yield-keeps-growing-my-retirement
[2] https://www.reit.com/investing/why-invest-reits