{"id":41349,"date":"2013-08-26T11:10:10","date_gmt":"2013-08-26T15:10:10","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=41349"},"modified":"2013-08-26T11:10:10","modified_gmt":"2013-08-26T15:10:10","slug":"have-income-stocks-stopped-reacting-to-rising-bond-yields","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/08\/26\/have-income-stocks-stopped-reacting-to-rising-bond-yields\/","title":{"rendered":"Have Income Stocks Stopped Reacting to Rising Bond Yields?"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/p>\n

There is no precise or fool-proof way to know that a stock has bottomed out after a large decline.\u00a0 Successful timing is often more of an art than a science.\u00a0 All the same, there are certain signs you can look for.\u00a0 And in my view, one of the most useful signs is the way a stock reacts to bad news.\u00a0 If a stock stops reacting to bad news, then chances are good that the selling is exhausted.\u00a0 The less-committed holders have already sold out.<\/p>\n

\"big\"<\/a><\/p>\n

This is where I see triple-net REITs today.\u00a0 Triple-net REITs are some of the most conservative and stable dividend payers you can find, which is why they became bond substitutes for millions of investors desperate for yield.\u00a0 So, when bond yields started to rise in May, this sector got hit a lot harder than most.\u00a0 Prices on some of the most popular triple-net REITs fell by as much as 20-30% from their 2013 highs\u2026at a time when the broader market held up relatively well.<\/p>\n

Take a look at the chart above, which includes four of the most popular triple net REITs.\u00a0 Over the last five trading days, at a time when the 10-year Treasury has yield has continued to push higher\u2014and now yields a few basis points away from 3%–Realty Income (<\/span>O<\/a>)<\/span>, Cole Properties (<\/span>COLE<\/a>)<\/span><\/strong> and American Realty Capital Properties (<\/span>ARCP<\/a>)<\/span><\/strong> are all flat.\u00a0 National Retail Properties (<\/span>NNN<\/a>)<\/span><\/strong> is down slightly, but again, it has reacted far less dramatically than recent weeks.<\/p>\n

Does this mean that the bottom is in?\u00a0 Maybe, maybe not.\u00a0 Markets are fickle, and there are no guarantees that investors won\u2019t find a new reason to dump these.\u00a0 Prices are attractive, however, and in my view it makes sense to start aggressively buying.\u00a0 Each of these REITs pays a dividend in the 5-7% range and I expect all to aggressively raise their dividends in the years to come.<\/p>\n

Disclosures: Sizemore Capital is long O, NNN, ARCP, COLE. This article first appeared on TraderPlanet<\/a>.<\/em><\/p>\n

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