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Channel: RedChip Companies
David Auerbach, Chief Investment Officer at Hoya Capital, makes the case for REITs as everyday infrastructure — and explains why the Hoya Capital High Dividend Yield ETF (NYSE: RIET) is built to look nothing like a market-cap-weighted REIT fund.
Auerbach brings over two decades in the securities industry, including more than a decade trading REITs at Green Street Advisors before joining Hoya Capital as CIO. He has published the Daily REITBeat newsletter since 2006. Hoya Capital is a leading real estate research provider and advises two NYSE-listed ETFs: RIET, focused on income, and HOMZ, the Hoya Capital Housing ETF, focused on the US housing industry.
Auerbach’s framing is that most investors already use REIT-owned property daily — data centers, cell towers, industrial warehouses, hotels — without registering it as an asset class. He argues REITs have underperformed through a sustained high-rate environment even as earnings surpassed pre-COVID levels, with over 60 REITs raising dividends this year against only a handful of cuts, and payout ratios still historically conservative. He sees the largest opportunity in small-cap REITs, which he says trade near 13x FFO versus roughly 17x for large caps and 25x for the mega-cap names in the S&P 500 — a discount he argues has become wider than the underlying fundamental risk, and one driving current M&A activity as private buyers acquire public platforms below net asset value.
RIET is rules-based and passively managed, holding 100 real estate securities rebalanced twice a year. Roughly one-third of those names are liquid REIT preferred stocks, representing about 10% of portfolio weight — a sleeve Auerbach says adds roughly 100 to 200 basis points of yield. The fund caps individual positions at approximately 1.5% and applies limits across sector, geography, and market cap. RIET pays monthly distributions and uses no leverage.
Important Investor Information: This content is for informational and educational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or investment strategy. Investors should carefully consider an ETF’s investment objectives, risks, charges and expenses before investing. This and other important information is contained in the fund’s prospectus, which should be read carefully before investing. The views and information presented are those of the featured presenter and ETF sponsor.
To learn more about Hoya Capital, visit their channel: https://www.youtube.com/@HoyaCapital
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Video length: 29:52