1 REIT That Should Be on Every Investor's Radar Plus 1 Promising REIT ETF

• REITs are large additions to your portfolio.

• Realty Income is simply a top-notch REIT.

• The Schwab U.S. REIT ETF is simply a promising REIT ETF.

• 10 stocks we similar amended than Realty Income ›

Investing successful existent property tin assistance instrumentality your portfolio to the adjacent level. It increases your diversification and enables you to make passive income, thereby enhancing your risk-adjusted returns. These qualities are wherefore astir fiscal advisors urge that investors person immoderate vulnerability to existent property concern trusts (REITs).

Here's 1 REIT that should beryllium connected each investor's radar and a promising REIT ETF to consider.

Realty Income (NYSE: O) is the epitome of what a REIT should be. It owns a well-diversified portfolio of implicit 15,500 properties leased to astir 1,650 tenants successful 92 industries. It focuses connected investing successful properties secured by semipermanent net leases with the world's starring companies. Net leases supply it with precise predictable and unchangeable rental income due to the fact that tenants screen each spot operating costs, including regular maintenance, existent property taxes, and gathering insurance.

The REIT supports its high-quality portfolio with a rock-solid fiscal profile. It has a beardown investment-grade recognition standing and a blimpish dividend payout ratio. That provides it with the fiscal flexibility to proceed investing successful income-producing properties during existent property downturns.

Realty Income's high-quality portfolio and fiscal illustration person enabled it to wage an charismatic and steadily rising monthly dividend. The REIT's payout presently yields implicit 5%. Meanwhile, Realty Income has accrued its dividend for 113 consecutive quarters. This operation of income and maturation has enabled the REIT to make a 13.7% compound yearly full instrumentality since its nationalist marketplace listing successful 1994.

The Schwab U.S. REIT ETF (NYSEMKT: SCHH) makes it casual to put broadly successful the REIT sector. It invests exclusively successful REITs that ain commercialized existent property (excluding mortgage REITs). The ETF has a precise debased expense ratio (0.07%), making it a cost-effective mode to passively put successful REITs.

While the money presently holds implicit 120 REITs, it provides concentrated vulnerability to the largest REITs. Its apical 10 holdings -- which see Realty Income, its sixth-largest holding astatine 4.2% of its assets -- comprise astir fractional of its nett assets. However, it inactive provides wide diversification crossed the assorted REIT sectors, led by healthcare REITs astatine 16.6% of its holdings.

The Schwab U.S. REIT ETF besides enables investors to make passive income (its trailing 12-month dividend output is 3%). While the ETF's distributions person fluctuated implicit the years, the payout has accrued implicit the agelong word arsenic the REITs it holds summation their dividend payments.