Merrill Lynch's strategists screened its 1,600 stock universe to identify the best equities for inflation protection. Of the 59 companies that made the cut, 34 are REITs.
In particular, Merrill Lynch was searching for securities with an "inflation-protected" dividend yield of at least that of a five-year Treasury note (then yielding about 3.9 percent) and a projected five-year dividend-growth rate equal to that of Merrill's highest inflation-rate forecast over the next five years (then 2.5 percent).
Merrill researchers say REITs currently appear to be "the only industry that uniformly provides income-oriented investors with an inflation hedge."
| "Inflation Protected” Dividend Yield Stocks"
|
| REIT |
Symbol |
Dividend
Yield |
5-Year
Projected
Dividend
Growth |
Simple
Expected
Return |
| The Mills Corporation |
MLS |
5.4 |
9.6 |
15.0 |
| Newcastle Investment Corporation |
NCT |
8.6 |
5.0 |
13.6 |
| General Growth Properties, Inc. |
GGP |
4.1 |
9.2 |
13.3 |
| Colonial Properties Trust |
CLP |
7.0 |
5.6 |
12.6 |
| iStar Financial, Inc. |
SFI |
7.3 |
5.0 |
12.3 |
| Simon Property Group |
SPG |
5.0 |
7.1 |
12.1 |
| Health Care Property Investors, Inc. |
HCP |
6.9 |
5.0 |
11.9 |
| Developers Diversified Realty Corporation |
DDR |
5.4 |
6.5 |
11.9 |
| Alexandria Real Estate Equities, Inc. |
ARE |
4.4 |
6.9 |
11.3 |
| Duke Realty Corporation |
DRE |
5.7 |
4.9 |
10.6 |
| Catellus Development Corporation |
CDX |
4.4 |
6.2 |
10.6 |
| The Rouse Company |
RSE |
4.1 |
6.5 |
10.6 |
| AvalonBay Communities, Inc. |
AVB |
5.1 |
5.5 |
10.6 |
| Realty Income Corporation |
O |
6.0 |
4.4 |
10.4 |
| Chelsea Property Group |
CPG |
4.4 |
5.7 |
10.1 |
| Kilroy Realty Corporation |
KRC |
5.8 |
4.2 |
10.0 |
| Essex Property Trust, Inc. |
ESS |
4.8 |
5.2 |
10.0 |
| CBL & Associates Properties, Inc. |
CBL |
5.4 |
4.5 |
9.9 |
| Equity Residential |
EQR |
5.9 |
3.9 |
9.8 |
| Pan Pacific Retail Properties |
PNP |
4.7 |
5.0 |
9.7 |
| Weingarten Realty Investors |
WRI |
5.4 |
4.2 |
9.6 |
| Trizec Properties, Inc. |
TRZ |
4.8 |
4.4 |
9.2 |
| ProLogis |
PLD |
4.6 |
4.6 |
9.2 |
| Kimco Realty Corporation |
KIM |
5.0 |
4.1 |
9.1 |
| United Dominion Realty Trust |
UDR |
5.9 |
3.0 |
8.9 |
| Public Storage, Inc. |
PSA |
3.9 |
5.0 |
8.9 |
| Summit Properties Inc. |
SMT |
5.8 |
3.0 |
8.8 |
| Boston Properties, Inc. |
BXP |
5.3 |
3.5 |
8.8 |
| Regency Centers Corporation |
REG |
5.3 |
3.4 |
8.7 |
| The Macerich Company |
MAC |
5.4 |
3.2 |
8.6 |
| Federal Realty Investment Trust |
FDT |
4.9 |
3.6 |
8.5 |
| Camden Property Trust |
CPT |
5.4 |
3.0 |
8.4 |
| AMB Property Corporation |
AMB |
5.1 |
2.8 |
7.9 |
| Vornado Realty Trust |
VNO |
5.2 |
2.5 |
7.7 |
| Source: Merrill Lynch Quantitative Strategy, IBES |
