Controlling Emotions and Focusing on Fundamentals Key for Long-Term Investors Despite High Yields Tempting Some into Risky REITs
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Emotions like fear, greed, and hype often drive market prices in the short term, diverging from business fundamentals. But earnings ultimately determine prices over the long run.
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Controlling emotions allows investors to make rational buy, sell, and hold decisions, avoiding mistakes driven by feelings. A moderate greed helps take calculated investment risks.
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Medical Properties Trust cut its dividend by 50% due to a high 96% payout ratio. Its growth forecasts are negative, but shares are cheap, presenting possible 40% upside.
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Gladstone Commercial cut its dividend 20% with a still very high 96% payout ratio, flat earnings, and risk of further cuts. Its 10% yield may seem tempting but is likely a trap.
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W.P. Carey recently slashed its dividend, ending a 24-year growth streak, as its payout ratio was unsustainably high. The cut shocked many, but high office exposure put the dividend at risk.