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A 15.3% Yield Makes this Security
Appealing for Aggressive Investors |
Published:
September 17,
2007
LMP Real Estate Income Fund Inc. (NYSE: RIT, $19.17)
-- This closed-end fund invests in the stock and debt of
commercial real estate owners in the U.S. Top holdings include
real estate investment trusts (REITs) like apartment owner
Camden Property Trust (NYSE: CPT), commercial real estate lender
iStar Financial (NYSE: SFI), office owner HRPT Properties (NYSE:
HRP), and mall developer Macerich (NYSE: MAC).
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RIT pays a regular monthly dividend, which has increased +74%
since the start of the year to $0.19 per share. Over the past 12
months, the fund has paid out $2.93 per share in dividends and
capital gains distributions, giving it a rich yield of 15.3% at today's
share price.
Since inception in 2002, the fund has produced total returns
(share price plus dividends) of +16% a year on average. That's
well ahead of the S&P 500, which has posted five-year average
annual total returns of just +13%. The shares are currently
trading at a slight discount of
-3.1% to the
value of the fund's investment portfolio, allowing investors to
purchase a dollar's worth of steady assets for less than 97
cents.
The value of RIT's investments will fluctuate along with changes
in interest rates and the economy. Stable or lower interest
rates generally allow real estate companies to continue growing,
but an economic slowdown could weaken demand for real estate and
put downward pressure on the fund's holdings. Also, the fund has
leveraged (borrowed against) about 25% of its portfolio assets,
leaving it exposed to higher short-term interest rates, which
could increase borrowing costs.
Still, RIT has held up relatively well amid the subprime
mortgage crisis and prolonged slowdown in the housing sector
over the past few months. After pulling back in June and July,
the fund has since recouped nearly half of its losses.
Action To Take ---> With
above-average long-term returns, strong dividend growth, and a
double-digit dividend yield, RIT has an attractive profile for
the more aggressive investor.
Good Investing!
Carla Pasternak
Editor
High-Yield Investing
http://www.StreetAuthority.com
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Carla
Pasternak draws on a variety of financial backgrounds to make profitable
calls on income-generating stocks for her readers.
Carla has
been employed in the investment industry for more than two decades. In
addition to her work as a writer for several other nationally recognized
financial publishers, her previous experience includes a position as
President of a well-respected investor relations firm. She has also been
writing shareholder reports for public companies (annual reports,
speeches, corporate profiles, slide shows, etc.) since 1980.
A highly
successful investment analyst, Carla specializes in high-yield,
income-paying stocks. In that pursuit, she's always mindful to select
companies that not only pay rich dividends, but that also have the
potential to deliver strong long-term capital gains.
On the
educational front, Carla holds both MBA and Ph.D. degrees. When she's
not watching the market, she's teaching business courses at the college
level and managing several million dollars in portfolio assets.
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