winter mountain landscape in the Silvretta mountain range in the Swiss Alps with famous Piz Buin mountain peak in the center on a beautiful dayGetty
When I created the DAVOS REITs index, it was in direct response to another acronym collection of technology-heavy stocks: FAANG, popularized by financial television pundit Jim Cramer, consisting of Facebook, Amazon, Apple, Netflix, and Google (originally FANG; Apple was added later; Google is actually “Alphabet/Google”).
My application of DAVOS was to help show off the ever-more-important realm of REITs – especially as S&P heralded Real Estate as a separate, tracked, and recognized sector, borne from their “Financial” group.
I picked a basket of top REITs – SWANs that help me “sleep well at night” – and those with the overall best dividend growth patterns, past, present and future: Digital Realty (DLR), American Tower (AMT), Ventas (VTR), Realty Income (O), and Simon Property Group (SPG). I consider these REITs – respectively from the Data Center sector, Infrastructure, Health Care, Triple Net Lease, and Malls – as proxies for dividend growth, and I expected that to be reflected in their future performance and results.
As 2018 ended, I tallied the results of our all-equity DAVOS index, and that of our other portfolios published monthly in Forbes Real Estate Investor. Let’s just say: I was quite happy at the DAVOS performance for 2018. Our index topped our 7 published portfolios; 4 of the portfolios had positive returns for the year, and every single one of them beat the S&P 500’s total return of -4.38%.
But I won’t gloat – it WAS a challenging year for REITs. I helped my readers have an edge, and intelligent REIT investors enjoyed strong, reliable, and growing dividends throughout the year. Getting paid, and regularly, is a very good thing.
Curious, though, I wondered how the DAVOS index stood up against FAANG.
Overall, DAVOS REIT dividends paid 975% better than the FAANG stocks, while still achieving nearly 7/8ths of the FAANG return.
Source: Rhino Real Estate Advisors
The DAVOS REITs had 4 of 5 in positive territory, and all 5 beat the S&P 500 return in 2018; only 2 of 5 FAANG components did that, pulling their weight to achieve the FAANG index’s higher return. Of course, we don’t consider DAVOS (or FAANG) as an actual portfolio, because of its limited diversification of just 5 holdings (each), but rather as a useful benchmark to compare with our other REIT portfolios, as well as your own.
Happy 2019 investing!
Readers of our upcoming February issue will be the first to see our new commercial mortgage REIT Index. Subscribe to the monthly Forbes Real Estate Investor. Just click here.
I own shares in DLR, VTR, O, and SPG.