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I have only ever bought 3 stocks before, but I am really intrigued by this whole new world.

I am thinking about buying some shares of Government Properties Income Trust (GOV), a publicly-traded (on the NYSE) real estate investment trust (REIT). Its stock price is around $15. I went to the SEC site and it makes no mention of money being tied up or free to sell whenever SEC REIT page

  1. If I bought some shares on my phone app, could I sell them at any time? (a classmate said "REITs take your money and you can never get it out" but I am thinking maybe that he did not mean publicly-traded ones)

  2. Is there a rule of thumb to be able to judge how much dividends per share price one would expect to get?

Thank you very much,

— a young man who grew up in rental houses

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    Exchange-traded REIT's operate in much the same way that stocks do: you can buy and sell at any time. There do exist publicly traded, but trusts that are hard to enter and hard to exit. For example, this Charter Hall REIT only has a "liquidity event" every five years. – Peter K. Mar 14 '18 at 12:46
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    There are public REITs and private REITs - the latter may have restrictions on withdrawals, but the former do not. You're not "taking money out" of the public REIT, just transferring your ownership to someone else. – D Stanley Mar 14 '18 at 13:21
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In an exchange traded REIT, the only requirement to sell your shares is that someone else stands ready to buy your shares. One of the ways you can guage the available buyers and sellers is to check the daily volume. This site suggests that as of this writing, the volume is about well above 80,000 shares traded today. https://www.nasdaq.com/symbol/gov It appears that there are buyers and sellers.

I suggest that you go here: https://finance.yahoo.com/ Plug in the symbol, GOV and then select the full-screen chart. Then select 5 years. You will see a chart of the stock price, volume and dividends. I also suggest that you compare GOV to the S&P 500 to check its performance relative to the market as a whole.

It appears that GOV pays a $0.43 dividend per quarter. Annualized, against a current share price of $13.83 indicates a yield of 12.4%.

REITs must distribute 90% of their earnings to shareholders through dividends. http://www.dividend.com/dividend-education/the-definitive-guide-to-reits-real-estate-investment-trusts/ It would therefore seem that, as long as GOV's earnings continue at the current rate, the dividend is secure. There is no guarantee, however, that their earnings, or any company, for that matter, will continue unchanged.

  • I'd suggest caution to OP. A 12.4% dividend rate might indicate that it is aggressively trying to entice investors, and the share price has had some wild swings over the last few years. Invest carefully. – JohnFx Mar 14 '18 at 17:36
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You can sell a REIT whenever, so long as there are buyers. It is like selling a common stock. For reference, you could compare it to selling a publicly traded "close" ended mutual fund, in which shares are held constant and individual traders can trade these shares during the course of the day.

Calculating dividends can be more complex. You can use a dividend growth model, a constant stream model or various other models. Since dividends in REITS are GENERALLY fairly constant, I would use a constant stream model, meaning that you simply take the average rate of dividends over the past 10-20 years with the particular REIT, and project the same growth rate out into the future. So if they dividends grew at a rate of 5% on average for the last 10 years, you can apply that to the expected dividend growth the next year.

AS A WARNING HOWEVER, dividends are not promised, and anything can happen as you know.

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