With the first half of the year on the books, tech has cemented its place as the runaway winner. But tech returns have started to slow. And with investors looking more defensively and with the potential for interest rate cuts ahead, other sectors may soon lead.
That could mean that underperforming sectors in the first half of the year can have their turn to outperform. And investors who position themselves could stand to benefit.
One underperforming sector is real estate. With interest rates high, and specific issues such as office vacancies weighing on the sector, it’s easy to see why.
However, real estate investment trusts (REITs) could perform better as rates come down, and if they’re operating in the right place.
One potential winner is Realty Income (O). They are a commercial REIT specializing in triple-net leases. That means the tenant is responsible for just about everything, and the rental income passes through to investors.
Action to take: Realty Income pays a monthly dividend, making it an ideal investment for income investors. Shares pay a 6% yield at current prices, significantly higher than its 5-year average of 4.6%.
For traders, the January 2025 $55 calls, last trading for about $1.55, could see mid-double-digit returns or better on a trend higher in shares in the second half of 2024.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.