Published Mon, 18 May 2020 11:08:34 -0400 on Seeking Alpha
I searched through broad REIT ETFs to see which ones have been impacted most by dividend cuts.
I came across KBWY and by far its holdings have the most dividend cuts.
19 out of 30 holdings either cut or suspended their dividend.
I was recently looking at REITs that have cut or suspended their dividends and I was wondering how that would affect REIT ETFs. After doing some research, one ETF that is popular among high-income investors is likely to see a decline in the yield because a majority of the holdings have either cut or suspended their dividends. The ETF I am referring to is the Invesco KBW Premium Yield Equity REIT ETF (KBWY). KBWY focuses on high yielding small and midcap REITs with the fund allocating the majority of its holdings to retail, office, healthcare, hospitality, REITs, which have been the hardest hit during the current crisis. KBWY pays a monthly dividend and based on total dividends paid over the last year, KBWY is yielding 13.49%. I believe the yield is set to fall given a large amount of constituents have cut or suspended their dividend.
The following table shows KBWY has 30 holdings and amazingly out of those, 19 have cut or suspended their dividend. Those 19 companies account for 61.86% of the weight of the fund. When I was starting to look at the holdings, and I was seeing, cut, cut, cut, I thought to myself, I hope I don't own any REITs in this fund. Going down the list, I did in fact own one REIT that KBWY holds and that is Industrial Logistics Properties Trust (ILPT). I am confident the ILPT dividend is safe given their largest Tenant is Amazon (AMZN) and ILPT is in a much more appealing sector that has been far less impacted during this crisis than Retail, Hospitality, Office and Health Care.
KBWY has a quarterly rebalance that will occur in June, so I went to the index provider website to see the criteria for the index, and thus KBWY. During the June rebalance,... Read more