Short-Sell Reits As Rates Rise

In mid-January 2024, markets realized early on that interest rates would not change. They sold REITs since their fund flows are less attractive when interest rates do not fall.

Realty Income (O) peaked at around $60 before trading in the $50 - $54 range. Before the BLS posted March CPI inflation rising, Realty stock looked like a good buy at $50. Now that markets are pricing in a remote chance of interest rates rising, O stock risks falling below $50.

W.P. Carey (WPC), which has a $12 billion market capitalization, appears ready to break down from its $54 - $58 trading range. WPC stock would yield over 6.3% and up to 7.0% in the coming weeks. Investors who still hold WPC stock might want to reduce their position before the stock falls further.

American Tower (AMT) lost 5.77% last week while Crown Castle (CCI) lost 4.04%. The yields of 3.6% and 6.5% are not attractive enough to compensate for the risks. Markets are bracing for costs for wireless and broadcast communications infrastructure to increase. Markets are not sparing the telecom sector, either. Fearful of their high debt, shares of AT&T (T) broke down from $17.50 to close at $16.31 last week. Verizon (VZ) lost 5.7%, while Canada's BCE lost another 2.5%.

BCE ended last week with shares yielding 9.19%. Markets are bracing for the firm to slash its dividend.

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