The Federal Reserve recently raised its benchmark interest rate by 50 basis points, the most significant since 2000, and could get even tougher with rate hikes to combat high inflation. In addition, recession worries and the ongoing Russian-Ukraine war should keep the stock market under pressure in the near term. Amid this environment, investors could turn toward residential REITs to hedge their portfolios, as they offer a steady income stream through dividends.
Investors’ interest in the REIT space is evident from the Schwab US REIT ETF’s (SCHH) 8.9% returns over the past year versus the SPDR S&P 500 ETF’s (SPY) 3.2% gains.
