Hey Fellow Income Hunters,
President Biden has said businesses should be taxed and regulated more heavily.
Dems having full control will:
- Require a minimum 21% tax rate on all foreign earnings.
- Raise the corporate tax rate from 21 to 28%.
- Impose tax penalties on companies that ship jobs overseas.
- Raise the minimum federal wage to $15 per hour.
This isn’t good for Big Tech (Amazon, Google and Facebook) OR Businesses that rely on low-wage jobs and foreign imports (i.e., McDonalds).
The Big Winner is the sector Power Income has been touting regardless who is in the White House …
And the Winner Is …
Real Estate Investment Trust (REITs)
REITS are corporate-tax exempt and 90% of its income must be distributed to shareholders.
They’re also an ideal real estate investment for many reasons, including …
- REITs use scale to get leverage, meaning lower mortgage rates than investors could get themselves.
- Investors own real estate without being tied to a specific property and they can liquidate their holdings at any time.
- REIT total return performance has beaten the S&P 500, other major indices and the rate of inflation over the past 20-years!
4 BIG reasons to move into REITs
1. Reversing the Trump Bump
When Trump put through the corporate tax cut back in 2017, investors allocated funds away from REITS into growth stocks.
It hurt REITS (VNQ), but benefitted the S&P 500 (SPY), up 19%, and tech stocks (QQQ), up 31%.
Check it out …
Now, if corporate taxes are hiked, the REIT tax exemption becomes more valuable…
2. Democrats will Even the Playing Field Retail
- Imposing more taxes and regulations on e-commerce firms would allow retail REITS to gain some ground versus online players.
- This would indirectly benefit shopping center and mall REITs which lease space to retailers. Good examples include Tanger Factory Outlets (SKT) and Kimco Realty (KIM).
3. Increase Domestic Production
- Biden appears to be in agreement with Trump’s protectionist stance on trade policy. He wants to impose tax penalties on businesses that ship jobs abroad.
- It benefits industrial REITs that own manufacturing facilities, warehouses, and distribution centers. Great examples include Prologis (PLD) and PS Business Parks (PSB).
4. Fewer Tax Incentives to Move out of High-Tax States
- Biden has proposed to raise or eliminate the cap in state and local tax deductions, which would lower the incentives to move into lower-tax states.
- Many office, apartment, and retail REITs are heavily invested in these high-tax states including Federal Realty Trust (FRT) and AvalonBay (AVB).
Democratic control of the Senate will drive investment flow out of bonds and into high dividend yielding REITs
Check out this spread (note the yellow portion below):
REIT performance over the past 20 years has beaten the S&P 500 Index and other major indices AND beat out inflation, therefore INCREASING your purchasing power!
A GREAT REIT PLAY
Iron Mountain (IRM) – 9.05% base line annual yield plus 35% price gain potential.
IRM provides solutions that include secure records storage, information management, digital transformation, as well as data centers and cloud services.
They own a real estate network of more than 90 million square feet across more than 1,480 facilities in 50 countries.
Let’s look at IRM’s Fundamentals:
As IRM proves their new digital business model the stock could easily trade at $38/share.
That would add more than 35% capital appreciation on top of a 9% annual return and over 9%-plus annual growth in that dividend.
Assuming just 5% dividend growth and zero price appreciation, you still get:
- 2x in just over 6 years
- 4x in 11 years
- 10x in 25 years
Now let’s see how Georgia plays out!
Live & Trade With Passion My Friends,
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