RNP Could Get A Boost From Falling Bond Yields

• Global interest rates are headed down recently.
• The U.S. Bond market looks like it might be trending the same way.
• Yield hungry investors may find themselves buying REITs and Preferred.
• RNP has a fat 6.76% dividend yield.

Cohen & Steers REIT & Preferred Income (RNP) has historically offered serious return potential for investors. While the share price has increased 167.1% over the past ten years, the total return (including dividends) has amounted to 474.9% over the same period.  This high return is partly due to the fat dividend yield, which is currently 6.76%.

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This fund's primary focus is 

to seek high current income through investment in real estate and diversified preferred securities. The secondary investment objective is capital appreciation. Real estate securities include securities of any market capitalization issued by real estate companies (including REITs) and preferred securities are issued by U.S. and non-U.S. companies. - Fact Sheet

For some investors, this investment may be ideal because it releases dividends monthly. Since October 2016, the fund has paid a $0.124 dividend, consistently. This monthly dividend amounts to about $1.49 on an annual basis. Back in 2009, the fund paid about $0.80 annually.  So, the dividend itself has grown about 86% over ten years.

Prior track records don't forecast the future. This is a certainty with the stock market. However, I do think that the prior track record at least gives you an understanding of the funds method of attaining goals. Investing in dividend growing REITs should help with the capital appreciation objective.

The funds Top Ten holdings comprise one-quarter of all holdings and show the broad diversification of the portfolio.

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American Tower Corporation (AMT) is a growth and income opportunity. As another author put it, "American Tower has a predictable and profitable business model" and "5G and other technological innovations gives AMT plenty of opportunity to capitalize on growth opportunities." The coming 5G network build-out is multiples faster than broadband internet. So, in theory, 5G technology could be a death nail for some cable providers as the internet goes completely wireless.  That's the theory anyway. Here's a profile of the top three holdings.

Equinix, Inc. (EQIX) proclaims that they are the "The Global Platform for Digital Business". This REIT is positioned to profit from the global build-out of cloud-based data storage and ever-expanding internet. Their partners include Oracle, Amazon, AT&T, and Google. This could explain the hefty stock price and appreciation. Normally, this is not a stock that a value investor would buy, but with just 3.5% of the portfolio, it's a worthy risk to take to build capital.

Prologis, Inc. (PLD) has 786 million square feet of space with 3,771 buildings in 19 countries on 4 continents. As a global logistics leader, they do business with companies like Amazon, Home Depot, Tesco, Walmart, and Pepsi. That's a good stable portfolio of established businesses.

The company breaks down the sector weighting in a graphic. The largest concentration of investments in the Preferred Portfolio are Banking and Insurance. This is not surprising, as preferred stocks generally tend to be financials.

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Here's a link to the December 2018 Annual Report and another link to the June 2019 Fact Sheet.

Overall, it appears that RNP could provide a good long-term option to build income and capital appreciation for some investors.  This may be an opportunity to look at with the current high dividend yield of 6.76% and falling overall global bond yields.