REITs at Last?

Real estate investment trusts have not been stellar performers on Wall Street in the past couple years, even though annual yields have often exceeded 8 percent.

But every investment has its day in the sun, and for the month-long period ended April 17, the Morgan Stanley index of REITs increased 6 percent while the Nasdaq Composite fell 26.3 percent.

"There has definitely been a flight out of some of the jazzy stuff into REIT stocks," said Craig Silvers, real estate industry analyst with brokerage Sutro & Co. Inc. in downtown Los Angeles. "People are learning that, along with rewards, there are risks."

No one, of course, can say how REITs will fare the rest of the year, but Silvers said REITs now have plenty of cash flow to honor and even increase dividends. A long-term investor can not only expect annual dividends above 8 percent but likely will see dividends steadily inch up even more over the years, said Silvers.

Though Silvers likes REITs, he isn't ready to write off non-REIT stocks. "I think a lot of day traders had to sell stocks (by mid-April) to come up with money to give to Uncle Sam," he said. "When you short-term trade, profits are treated as ordinary income."