Are you tired of settling for meager returns on your investments? Do you dream of earning a steady stream of passive income without the hassle of being a landlord? If so, it’s time to take a serious look at money 6x investment trusts. These high-yield REITs (real estate investment trusts) aim to deliver annual dividend yields of 6% or more, providing investors with a potent combination of income and growth potential.
In a world of historically low interest rates and stretched stock market valuations, money 6x investment trusts stand out as a compelling option for yield-starved investors. By investing in a diversified portfolio of income-producing real estate assets, these trusts generate robust cash flows that they pass on to shareholders in the form of regular dividend payments.
But with great rewards come certain risks. Money 6x trusts often use leverage (borrowed money) to amp up their returns, which can magnify losses during market downturns. They may also concentrate heavily in specific property types or geographic regions, leaving them vulnerable to localized economic shocks.
What are Money 6x Investment Trusts?
First things first – what exactly are we talking about here? Money 6x investment trusts are a special type of real estate investment trust (REIT) that aims to provide an annual dividend yield of 6% or greater. REITs in general are companies that own and often operate income-producing real estate assets like apartment buildings, office towers, shopping centers, and more.
By packaging these properties into a publicly-traded security, REITs allow everyday investors to gain exposure to the real estate market in a liquid, diversified way. In order to maintain their special tax status, REITs are required to pay out at least 90% of their taxable income as dividends to shareholders each year. This is why REITs are known for their above-average yields compared to the broader stock market.
Money 6x trusts take this income focus a step further. They specifically target a 6%+ annual yield through a combination of high-quality properties, efficient operations, and often the use of leverage (borrowed money) to juice returns. Of course, this also comes with higher risk.
How Money 6x Trusts Work
Under the hood, money 6x investment trusts work similarly to other REITs. The trust will raise capital from investors by selling shares, then use that money to acquire a portfolio of cash-flowing real estate assets. The income generated from rents and leases flows back to shareholders in the form of regular dividend payments.
The key difference is that 6x trusts aim for a higher yield threshold of 6% or more. To achieve this, they may focus on certain property types or locations that can command higher rents. They also frequently employ more leverage than the average REIT, borrowing money at lower interest rates to purchase more properties and amplify returns.
This use of debt can be a double-edged sword, though. While it enhances returns in good times, it also increases risk during a downturn. If property values fall and vacancies rise, the trust may struggle to meet its debt obligations. This is why 6x trusts are generally considered more speculative than your run-of-the-mill REIT.
Top Money 6x Investment Trusts
With the basics out of the way, let’s take a look at some of the leading money 6x investment trusts available to investors today:
1. Realty Income (Ticker: O)
Realty Income is a bellwether in the REIT space, known for its consistent track record of dividend growth. The trust owns over 11,000 commercial properties across the US and Europe, leased to high-quality tenants like Walgreens, 7-Eleven, and Dollar General.
While its current yield of 4.4% falls short of the 6x threshold, Realty Income makes up for it with 27 consecutive years of dividend increases. It’s a reliable pick for investors prioritizing stability and income growth.
2. AGNC Investment Corp (Ticker: AGNC)
AGNC is a mortgage REIT, which means it invests in real estate debt rather than physical properties. Specifically, the trust buys agency mortgage-backed securities (MBS) issued by government-sponsored entities like Fannie Mae and Freddie Mac.
This focus on government-backed MBS provides a degree of safety, but the trust also uses substantial leverage to generate its sky-high 11.7% yield. AGNC is really only appropriate for investors comfortable with interest rate and credit risk.
3. Annaly Capital Management (Ticker: NLY)
Another major mortgage REIT, Annaly invests primarily in agency MBS along with some non-agency securities and commercial real estate debt. The trust currently yields an impressive 10.5% thanks to its use of leverage.
However, that outsized yield comes with significant exposure to interest rate movements. As rates rise, the value of Annaly’s MBS portfolio may decline, pressuring both the share price and dividend. It’s a complex trade that requires active management.
4. Arbor Realty Trust (Ticker: ABR)
Arbor is a specialized REIT that originates and invests in structured finance products for multifamily and commercial real estate. This includes bridge and mezzanine loans, preferred equity, mortgage-backed securities, and other debt instruments.
The trust’s unique focus has allowed it to generate a 10.3% yield for shareholders while maintaining a conservative balance sheet. Arbor also has a strong history of dividend growth, increasing its payout by 8% annually over the past five years.
Benefits of Investing in Money 6x Trusts
So why consider adding money 6x investment trusts to your portfolio? There are a few key potential benefits:
1. High Income
The most obvious appeal of 6x trusts is their juicy yields, typically ranging from 6% on the low end to upwards of 11-12% for the more aggressive funds. This can provide a substantial income boost for investors, especially in today’s low-yield environment.
2. Diversification
REITs in general are a good way to diversify your portfolio beyond traditional stocks and bonds. They tend to have low correlations with other assets, meaning they don’t always move in lockstep with the broader market. This can help smooth out overall returns.
3. Inflation Protection
Real estate has historically been a good hedge against inflation, as property values and rents tend to rise along with consumer prices. By investing in a REIT, you gain exposure to this inflation-fighting asset class.
4. Liquidity
Compared to buying physical real estate properties yourself, REITs offer much more liquidity. You can buy and sell shares quickly and easily through your brokerage account, without the hassle and expense of managing tenants or maintenance issues.
Risks to Consider
Of course, no investment is without risk. Here are some of the key dangers to keep in mind with money 6x trusts:
1. Leverage
As mentioned earlier, many 6x trusts use borrowed money to amplify their returns. While this boosts yield, it also increases risk. If the trust’s assets decline in value, it may have trouble meeting its debt payments, which could lead to dividend cuts or even bankruptcy in extreme cases.
2. Interest Rate Risk
REITs, and especially mortgage REITs, are sensitive to changes in interest rates. When rates rise, the value of existing debt securities falls, weighing on book values. Higher rates can also make it more expensive for REITs to borrow money to acquire new properties.
3. Economic Downturns
During recessions, demand for real estate can wane as businesses close up shop and consumers pull back on spending. This can lead to falling occupancy rates, lower rents, and declining property values – all bad news for REIT investors.
4. Concentration Risk
Some money 6x trusts may focus on a particular property type or geographic market to boost yields. While this specialization can be a positive, it also leaves the trust more vulnerable to localized economic shocks. A diversified REIT is generally lower-risk.
How to Invest in Money 6x Trusts
If you’re convinced of the potential benefits of money 6x investment trusts, the good news is they’re fairly easy to access. You have a few options:
1. Individual REITs
The most straightforward route is to buy shares of individual REIT stocks through your brokerage account. This allows you to pick and choose the specific trusts that align with your goals and risk tolerance. Just be sure to thoroughly research each REIT before investing.
2. REIT Mutual Funds and ETFs
If you’d prefer a more diversified approach, consider a REIT-focused mutual fund or exchange-traded fund (ETF). These vehicles pool money from many investors to buy a basket of REIT stocks, spreading your risk across dozens or even hundreds of individual trusts. Some popular options include the Vanguard Real Estate ETF (VNQ) and the iShares U.S. Real Estate ETF (IYR).
3. Crowdfunding Platforms
A newer option for REIT investing is through real estate crowdfunding platforms like Fundrise and RealtyMogul. These sites allow you to invest in private REITs not traded on public exchanges, often with lower minimum investments and fees. Just be aware that these investments may be less liquid than publicly-traded REITs.
The Bottom Line
Money 6x investment trusts can be a powerful tool for investors seeking high income and real estate exposure. By aiming for a 6%+ annual yield, these REITs offer the potential for substantial cash flow along with long-term capital appreciation.
However, that outsized yield comes with added risks, including the use of leverage, interest rate sensitivity, and vulnerability to economic downturns. As with any investment, it’s crucial to do your due diligence and make sure a 6x trust aligns with your overall financial plan before diving in.
If you have the risk tolerance and are looking to boost your portfolio’s income potential, money 6x investment trusts are worth a closer look. Just remember to diversify your holdings and never reach for yield at the expense of prudent risk management.
