Another day, another 1%+ move in the S&P 500, this time to the downside. In case you are keeping score, that's 22 such days so far this year, five out of the past seven, 22 out of the past 42; you get the picture, volatility is back. Yet, with all of the oscillations, the S&P 500 is down just 2% year to date. Yes, I am fascinated, or perhaps obsessed with my little homegrown measure of volatility, given my constant references to it.
Sometimes on the down days, like yesterday, I like to look past all of the red on my screen, to see what is in positive territory, what names held their own while the broad markets were falling. In my case, it was the high yielders in my portfolio, primarily the REITs (real estate investment trusts). REITs have had a rough run so far in 2018, primarily due to rising interest rates, which can wreak havoc on the sector, where yields become less impressive as the Fed hikes rates.
Yesterday's "winners" included three of the names ironically featured in my column from almost exactly one year ago, REITs Farmland Partners (FPI) (+.9% on the day), Getty Realty (GTY) (+.8%), and CoreCivic (CXW) (+.7%). The fourth, not a REIT, and lower-yielding Corning (GLW) was down 2%.
The past year has not been kind to any of the three REITs. Private corrections operator CXW, ever controversial, is down about 33% over the past year, as a good deal of the post-Hillary Clinton defeat (she vowed to put an end to private prisons "when" elected) luster has worn off. CXW currently yields 8.41%, and recently hiked its quarterly dividend from 42 to 43 cents. It still trades about 50% higher than the pre-election low, including dividends.
FPI is down about 18% over the past year, as the mini-excitement from the company's merger with American Farmland has been replaced by speculation that FPI may have to cut the dividend, as well as a less positive view of farmland overall. FPI, which currently owns or has under contract 166,000 acres, (roughly 259 square miles) yields just over 6%.
GTY, the leading REIT that specializes in gas stations and convenience stores, is up slightly over the past year (+3%). Currently yielding 5.25%, the company increased the quarterly dividend 14% in December, from 28 to 32 cents. It's been an interesting road back for GTY, which ran into some trouble back in 2011, but has made a decent recovery.
During yesterday's action it was private prisons, farmland, and gas stations that provided some stability in my portfolio. We'll see how they behave the rest of the year as the Fed likely raises interest rates two (or perhaps three, in my view) more times in 2018, amid likely continuing market volatility.