-Why so many ETF’s are being launched @ BuildYourETFPortfolio
-Let’s make a difference starting next week @ AllFinancialMatters
-Half of America does not pay taxes @ Darwin’s Money
-Learning how to invest in oil to maximize profits and minimize risks @ OilandGasEtfs
-Millionaire Teacher book review @ Balance Junkie
-S&P downgrades 34 of 37 Italian banks @ ZeroHedge
-The world’s richest people adjusted for ago @ Clusterstock

Dividend Investing

-18 stock picks for 2012 @ TheDividendGuyBlog
-12 dividend companies with large patent shields @ Dividend Monk
-5 reasons why I love REIT’s @ Dividend Ninja

Tech Stocks Investing

-Linked (LNKD) beats the street @ TechCrunch
-Tripadvisor (TRIP) comes up short @ TechCrunch

MSFT

Microsoft has been known since the start for its software, its operating system Windows changed how we were able to use pc’s while software like Office ended up being used by nearly every pc user around the world. You might argue that things are changing and that it’s far from clear how those will be able to compete in this new cloud based era. I would agree. Certainly, the domination that Windows has enjoyed will probably never be the same. That being said, I don’t expect a crumble anywhere near what Internet Explorer ended up suffering. Building an operating system is complex on so many levels and even powerhouses such as Google and Facebook are facing many challenges in coming up with a viable alternative.

Are Windows/Office and others slowing down? Not significantly. But the booming years of Microsoft certainly look way behind. Just take a look at this MSFT chart from the past 5 years, you will see what I mean.

A New Era?

I do think Microsoft is doing great things though with all of the cash that its software business continues to generates. After paying a reasonable and growing dividend, Steve Ballmer and others have been able to develop promising businesses.

Online/Social

Argue as much as you want, I think this still has to be seen as a success, even though it is proving a very expensive one. Microsoft is putting up billions of dollars into its online business, trying to compete with Google and others through Bing and its other properties. It has proven to be an incredibly difficult challenge which is no surprise. Almost everyone has given up on competing with Google in search but Bing continues to challenge. A remarkable success has also been the early stake in Facebook which not only was a good move financially but it has also helped Microsoft develop a great relationship with what is without question, the new dominant internet player. Facebook, which will become the biggest IPO in a long time to hit the markets in 2012 will be an important partner for Microsoft’s online division. How soon will it be profitable? It’s unclear of course but I personally think that the main priority should continue to be improving the product and the audience, everything else will come.

Gaming

No doubt, many thought Microsoft was crazy to get involved in an industry dominated by Sony’s Playstation franchise. Where are the doubters now? The company has been incredibly successful and continues to be an extremely strong player in the fast growing gaming market with its Xbox 360.

Microsoft Taking Over The Living Room?

Slowly but surely, Microsoft is becoming a huge player in a space where Apple and others are fighting very hard: The control of our living rooms. As Xbox continues to gain market share, it has proven to be a premium place for all entertainment. There were games, links to providers such as Netflix but there is also a growing offering of tv shows, movies and all kinds of other entertainment options. On Black Friday, Microsoft sold 960,000 Xbox consoles in the US alone. A large portion of those users will start using Xbox to access entertainment.

Major Battle Coming Up

Of course, 2012 will be a big year for Microsoft as the Xbox is likely to compete with some type of offering from Apple when Apple comes up with a new product for our living rooms (some type of Apple TV). In the end, it comes down to valuations though and I personally think that Microsoft might turn out to be a very good play for 2012. Will it explode? Probably not. But there is much more upside than downside.

Disclosure: No positions on Microsoft (MSFT)

-Invest $25K, Make Money And Don’t even dip into your pocket @ TheDividendGuyBlog
-Do demographic changes affect stock returns? @ A Rich Life
-China tech IPO’s turning into horor stories @ DigiCha
-USA unemployment rate drops to 8.6% @ Curious Cat
-Why we can’t have our cake and eat it too @ BalanceJunkie
-What are dividend cuts and raises? @ WhatIsDividend
-Canadian Insurance Dividend Plays @ CanadianDividendStock
-Tech Millionaire: “The Rich Aren’t Job Creators” @ WSJ
-Why Do Foreign Banks Need Dollars? @ NYTimes
-Apple vs. Samsung @ The Big Picture

The easiest way

Of course, the easiest way to get an economy going is to increase exports. Why? Because that means that foreigners are paying for products to be produced. Let’s take the US. The government has been trying to get its trade deficit improved which can be done by increasing exports and/or decreasing imports. There are many ways to get this done:

-Decreasing exports: Add tarriffs (such as what is often being discussed against the Chinese, it makes foreign products more expensive), weaken the currency (which also makes foreign products more expensive).

-Increasing exports: Signing free trade agreements, subsidizing programs that can increase exports and also weaken the dollar (which makes the goods & services produced in the US cheaper for freigners).

A cheaper dollar = solution?

How does that work exactly. Let’s imagine a scenario where 1 $USD is worth $2 CAD. In that scenario, the US dollar is very strong and it makes it difficult for the US to improve its trade deficit. I will simplify things a bit but here are 2 examples:

-US Producers will need to sell twice as much in $CAD in order to make the same revenues – All sales in $CAD are divided by two when converted back into $USD.

-It becomes very cheap for Americans to buy Canadian goods. If a product is priced at the same price but in $CAD, US consumers will tend to buy the Canadian good.

Now, through different strategies, the US government could decrease the value of the $USD. For the sake of simplicity, let’s imagine a 50% decrease where 1 $USD = 1 $CAD. In this scenario:

-The same amount of products exported to Canada will have twice the value if sold at the same price (result = Exports increase)
-US residents will no longer have the same incentives to shop for Canadian products (result = Imports decrease)

End result = Trade deficit improves which is often seen as the best and easiest way to quickly “fix an exonomy”.

How to devalue a currency?

There are many ways to devalue a currency and one of the easiest ones is to print money. If the US Treasury decides to print money, that has a direct impact on the value of the exisiting money. It decreases it. Other methods exist to get the samme result (such as the government trading foreign exchange to influence the value of its currency) but printing money is by far the most popular method at the moment.

The problem here

There is one big problem in this big idea. Since almost all major world economies suffered from major slowdowns in the recent economic crisis, they are all using this method to get their economies back on par. Of course, that makes it much less effective. If the US and Canadian governments both print money in equal proportion, both of their dollars will see no currency depreciation (against each other). If all countries do the same, it nullifies the effects all around the world. And that is exactly what’s happening.

In fact, the G20 members have all made statetements regarding the major problem that this currency war is causing. It’s not quite clear how it can get resolved. Why? Because every member has an individual interest in having its currency depreciated. Since all countries think about the recovery of their own economies above the recovery of the world economy, it has created the potential for much more serious problems.

Side effects….

There is another issue as well. Not only are these measures not effective when so many governments are trying the same tactics but as important, these strategies can have very serious side effects. Since the most used strategy to devalue currency has been printing money (nowhere more than in the US might I add), I would like to ask you what the consequences are of printing money over the medium to long term…

Inflation

With governments printing money, one of the primary sources of worry for financial analysts is that inflation could pick up. Historically, printing money has had one common effect in almost all cases; it has produced inflation. That means the value of most assets and of money drops and can be quite dramatic for investors and the population in general.

What it means for your portfolio

I think there are two main investments that could benefit greatly if this depressing scenario becomes reality.

-Gold: There are two important reasons why buying gold and Gold ETF’s could turn out to be a winning strategy:

1-Inflation hedge: Gold has been a very good historical hedge to inflation and buying gold, silver, platinum or other metals is a good way to protect yourself.
2-Currency: As all countries try to devalue their currency, some important questions are being asked about the current monetary system and how it can manage such situations. There are no easy solutions but it becoming clear that having the $USD as the reserve currency is far from a perfect solution, and many governments are moving away and putting some reserves either into gold or other currencies. It is unclear how things will evolve but there is a growing rumor that gold could have a more central role if things were to change. I think these two scenarios are a big part of the reason why gold has been rising so fast as it heads towards $3000.

-Inflation ETF’s: These ETF’s are either straight inflation plays that mix different assets for you but you can also get TIPS ETF’s that invest in inflation protected treasuries. These are the best way to get direct protection and although you do still depend on official government figures, I think we are still far from the point where serious doubts exist about those figures. TIPS are thus a good investment to have.

While I think that gold and TIPS are both the most obvious ways to invest for such a scenario, I think it’s important to keep in mind that this is just a scenario. It is a possibility but it’s difficult to say how far things will go. So putting your entire savings on one scenario would be foolish. But not preparing at all could turn out to be foolish as well.

Side Plays: Short the US dollar?

Another interesting way to invest in this scenario is to think about shorting the US dollar through ETF’s. The US dollar has been very volatile and it could increase as well so there is risk involved. But in a scenario where the monetary system is reformed, there is no doubt that it would have significant consequences for the US dollar….

Government debt & deficits

Governments have more debt these days than at any points in history. They have borrowed during the good times and with the economy struggling, most governments have done as the US Government and the Fed has done… borrow massive amounts to stimulate the economy. It has worked to an extent but the world economy seems sluggish at best and governments are unable to get back to a no deficit environment. The prospects for the next few years are dramatic as well. Think about it… In developed countries, the population is aging very quickly and the governments do not have even close to the amounts that will be required to pay for everything that they’ve promised. Planning on living off of a government pension? Think again.

The big problem is that economists and governments know that the numbers do not add up but are unwilling to take the fight. Who could blame them? Barack Obama attacked the health care issue and the French government attacked the retirement age. In both cases, what they proposed was not even close to being a good step. It was like taking a first step in a 1 hour race… it’s a start..but so little. The problem of course is that in both examples, the governments had to settle for less amid huge backlash from citizens and opposition parties. That will certainly not encourage governments to take action. Rather, they will “kick the can” further down the road, as we’ve been doing for years. But at some point, we will need to tackle the issues.

Will it be too late?

S&P is a credit agency that is well known and respected. They do not get any fun out of publishing gloom report. Yet the report that they recently posted about sovereign debt and deficits is very alarming. The conclusion is that by 2045, 60% of governments would have their debts rated as “Junk”. The report is done with assumptions of “no major changes”. Of course, some changes will be done before then. But how late will we wait and how dramatic will things be by then? Just imagine that if a government’s debt is downgraded, the investors require a much higher interest rate which puts the country in further trouble which creates more debt… it’s a vicious cycle.

It’s happening already

Remember the problems that Iceland encountered, and Greece? Both are being helped by European Union members and now that Ireland is also in serious trouble, it’s not as clear how Europe will help. The more serious issue is that bigger countries like Spain and Italy also have a very upward hill to climb in the next few years. They have huge deficits, struggling economies and worst of all.. they cannot be saved easily. Europe and even the US have huge reserves, but saving huge G20 economies might be beyond what they can do right now.

I could go on and on and I’m not even trying to be pessimistic here, these are all serious studies being discussed by very credible economists. The issue could be discussed for hours and days but there are no easy ways to resolve it.

Impact on investment strategy…

I think it’s far from clear how to prepare for such an environment. There are no clear answers. Betting on government bankruptcies 10 or 20 years from now is not an easy thing to do and not an easy scenario to protect ourselves from. Here are some conclusions that I draw from this dark but far from impossible scenario:

1-Do not count on government help: No matter what the government tells you… if you are not yet retired, assume that it will go back on its promises. It has no other alternative. I assume that I will receive none of the money that I should be getting in theory from the government once retirement comes. It will probably not be entirely true but reality will not be that far off in most cases

2-Prepare for the doom scenario: If governments fail, it’s unclear how things would go. Massive cash printing? Interest rates going much higher? I think that avoiding leverage as much as possible is critical. Staying as debt free as possible is the best way to do so. If ever things go wrong and rates go much higher, the impact will be minimal. Having a very valuable house but a huge mortgage with it can be much more difficult to deal with.

3-In terms of investments: It’s quite unclear how this type of thing will play out. There are many leveraged and inverse funds that help you go short on US government debt but the outlook is so long term that those investments would be eaten by the fees on over time. I think that over time some ETF’s will be created for this purpose but in the meantime, safe bets might be:

-Gold (uncertainty hedge?)
-Other metals (silver, platinum)
-Inflation protected bonds (through ETF’s)

Do any of you have other thoughts on this?

For or against them?

My argument is that those debating both sides either do not know enough about the issue or they simply prefer to stay on the safer side of the argument. Yes, yes, I will explain myself. There are complex relationships involved in raising or diminishing taxes. If you increase taxes on the corporations, the government WILL NOT receive 10% more taxes. It will likely be slightly less than 10% but could be less and in some situations, the government might even end up receiving less money. Why? Let me go to an example that I read about last week. I must say, I am not putting Google or Bombardier on the spot here because all multinationals have these decisions to make. No matter if you are building airplanes or selling intangible assets, there are ways to change the tax burden of a corporation.

Example A – Bombardier: This is a fairly simple exam. Let’s imagine that Bombardier, a Canadian company that has entities in Mexico, Canada and the United States builds an airplane to be sold in the US. Let’s imagine a scenario where the tax rate is the same in all 3 of the countries.

Major pieces of the plane are built by Bombardier Mexico
Plane is assembled in by Bombardier Canada
Plane is sold by Bombardier USA sales team

If the costs involved for each part are the following

Bombardier Mexico        $10M
Bombardier Canada         $5M
Bombardier USA             $5M

Now, let’s imagine a scenario where the plane is sold for $30M. You can imagine that each entity would gain 50% of profits which means:

Bombardier Mexico        $5M
Bombardier Canada         $2,5M
Bombardier USA             $2,5M
Total = $10M

If the level of corporate taxes is the same, at 25%, this translates into:

Mexican Government    $1.25M
Canadian Government    $625,000
US Government        $625,000
Total = $2,5M

Now, let’s imagine a scenario where the US government raised taxes to 35% (on rich corporations). For Bombardier, this would translate into $250,000 of additional taxes on that plane. You might say that they can afford it. You might be right…

There is another way…

Instead of paying $250,000 of additional taxes for each plane sold, Bombardier would likely switch for a more tax efficient structure. A lot of words but it’s actually very simple…. Basically, Bombardier Canada would sell the plane at a higher price to Bombardier USA. That would result in higher profits for Bombardier Canada and lower profits for Bombardier USA. Instead of selling the plane for $22.5M, let’s imagine that it sells the plane for $24.5M. In this scenario, the profits for Bombardier are the same:

Bombardier Mexico        $5M
Bombardier Canada         $4,5M
Bombardier USA             $0,5M
Total = $10M

That results into these taxes =

Mexican Government    $1.25M
Canadian Government    $1,125,000
US Government        $175,000
Total = $2,55M

End result = Bombardier loses $50,000 (compared to the pre-tax scenario), the Canadian Government receives $500,000 more and the US Government receives $450,000 less. This is much more common than you could imagine and it becomes much more difficult to regulate when you have 20 or 30 countries involved instead of 3. Increasing the taxation level in this specific case results in less income for the US government.

Google

Google continues to be a growth company as its revenues increase every year. Despite that fact, it cut its taxes by $3.1 billion in the past 3 years thanks to increasing profits in its operations in Bermuda, Ireland and other “more favorable” tax centers. How much more favorable? Google’s overseas profits were taxed at a rate of 2.4%!! You could read a much more in depth analysis of how the company is doing it but needless to say that the US is making less out of Google than it was a few years ago despite rising profits. Like other multinationals, these methods are far from illegal and they are in fact very difficult to dispute. How can you prove where the profit & revenues should be made.

Basically, any company that did business with Google’s advertising likely did business without knowing with Google’s Ireland operations as 88% of the $12.5B from  the sales of advertising were “made” by Google’s Ireland operations which then funnel the money to Bermuda through complex but legal steps.

Who should be blamed?

It would be easy to blame Google or Bombardier but that would be too easy:

-They are acting legally
-They are in direct competition with other similar structures
-Their duty is to maximize returns for their shareholders within the rules

What to do?

I personally think this is the more interesting question. Next time you hear someone talking about taxing the rich as the miracle solution, please remind them that it’s much more complex than that. Raising the taxes might be a good idea but it should be decided after considering all of the direct and indirect impacts.

Ask French citizens how much more they are making on taxes from their wealthiest citizens. The answer will get you a sad face as a large proportion of the richest French have moved to neighbor countries to avoid the tax increases.

There are no easy solutions and these problems should be treated as what they are: Complex Global Problems.

I’d love to hear your thoughts on this. Am I the only one who is tired of these simplified arguments?

2-The best performing ETF so far this year?  AGQ (ProShares leveraged Silver ETF)  +118,36%

3-How many leveraged ETF’s would you find in the top 25 ETF’s this year?  8

4-How many leveraged ETF’s would you find in the bottom 25 ETF’s this year?  22

5-Top Yielding ETF ? REM (Ishares NAREIT Mortgage Plus Capped)  – +10,41%

6-Youngest ETF ? NORW-  Nov 10th 2010 – Norway ETF

7-OIdest ETF ? SPY – January 1993 – S&P500 ETF

8-Biggest Fees ? Powershares CEF Income Composite – 1.81%

9-Smallest Fees ? VOO – Vanguard S&P500 – 0,06%

10-There are over 1000 ETF’s but the top 5 ETF’s account for 28% of assets

11-The Top 5% of ETF’s control 69% of ETF assets

12-Less than 16% of assets in ETF’s are invested into commodities despite all of the talk about them

13-GLD, the Gold ETF holds more physical gold than China’s government and is ranked only behind 7 other entities (US, Germnay, IMF, France, Italy, Switzerland & Japan)

14-Worst performing ETF so far this year? ZSL – ProShares UltraShort Silver: -71,15%

15-Best performing ETF in the past 5 years? IAU iShares Gold Trust +239,47%

16-Biggest country (by GDP) without an ETF to its name – Saudia Arabia (world #26 economy)

17-Most volatile  ETF in the last year: DRV -  Direxion Daily Real Estate Bear 3x Shares – 87.32%

18-While Ishares has 210 ETF’s (19.6%), they have 27 of the top 50 ETF’s ranked by assets

19-Guess which ETF is ranked #28 in terms of market cap but is actually the 2nd most traded ETF in the past 30 days? XLF Financial Select Sector SPDR Fund

20-Over 300 of the active ETF’s have been created since the start of 2009

As regular readers know, I am an avid user of the P/E ratio when selecting stock picks. There are many reasons why I trust this ratio above others and I have written about it but I’m not blind either, P/E ratio does have its flaws and limitations. One of those is its inability to help us see what a company owns. A few of the stocks that I follow such as Valueclick (VCLK) are stocks that have strong cash positions and a strong balance sheet in general which makes the P/E ratio give an incomplete picture of the reality.

Yahoo (YHOO)…

One of the best examples is Yahoo (YHOO), a company which I routinely bash on this blog but which is not as easy of a short as you would think. Why? Because when valuing Yahoo, I think it’s important to consider 3 main things:

-Strong balance sheet: Yahoo has almost 7 times as much assets as it has debt.
-Yahoo owns a major stake in Yahoo Japan which is a very profitable somewhat independant company
-Yahoo owns a major stake in Alibaba, one of the more important ecommerce companies in the world, located in China

What does it all add up to? Honestly, I think it’s important to consider the balance sheet saituation of a company when making stock picks. It sounds obvious when saying it but the P/E ratio would not consider it. In Yahoo’s case, the book value per share, the net assets per share is worth about 9$. Imagine if that number was 12$ or 13$… The company would need to be making almost no profits for the stock to be a good buy

What I will be doing from now on

There is no perfect solution to this and I will be doing some experiments but for now what I will be doing is incorporating the book value per share in my analysis, in the tables that I present when I do new stock picks and in the charts presented in the IS Premium newsletter. I have been monitoring this number and am not convinced that it’s the best way to go but there is no doubt about one thing: Adding this ratio will add valuable information for my future stock picks. In that regard, I think it will be very interesting to see how things go.

Would love to hear from you on this, do you look at the book value per share when making stock picks and if so, how do you consider them?

Not all financial graduates end up having a lifestyle similar to what you hear about in movies (such as Wall Street) or newspapers. But on average, we can’t complain too much.

Why do I love the markets so much?

There are many reasons of course but the main ones for me are:

-Numbers: Some are good with names, facial recognition, remembering what they read, etc. Personally, one of my big strengths is dealing with numbers. I have a passion for them that is quite difficult to explain really. Ever since I was very little, I’ve enjoyed doing mental calculations, looking at any kind of stats (sports, demographics, finance, etc).

-No end to the learning experience: Many professions could say the same but there is no end to what I could learn. I could try learning about the markets in general, or a specific one (equities), a sector or even a company. I could learn about financial models, derivatives, balance sheets, financial statements, etc. There really is no end and in general, I think the more you work or spend time doing it, the better idea you get of what you like, what you’re good at, etc. I’m not fully convinced but over the past 5 years I’ve learned an incredible number of things.

-Most dynamic environment known to man: No offense and I guess it would be easy to debate on this but I can’t think of another environment that is as dynamic as the financial markets. Almost every single event that occurs in the world has some kind of impact on financial markets and the relationships between these events and the markets evolve and have been doing so for over a century. Very few individuals are able to consistently predict how the markets or even individual assets will react.

-Adrenaline: Trading provides high’s and low’s that has helped to find out my strengths and weaknesses. As much as you know what must be done, it becomes much more difficult when you have a losing position that is losing value. In the same way, selling winners is a big test to greed. At what point can I be “happy” with a trade? Over time, this has resulted in using trading rules (such as my limit loss & limit profits). Each of us react differently when trading which makes the experience that much more beneficial. Even the best of the best have difficult times at some point so you can imagine how much mortals like me can learn through trading.

Is it perfect?

No it’s not of course. Like everything else, there are some less glamorous sides to trading:

-Difficult to unhook: Unless you close out your positions, it’s difficult to completely ignore what is happening in the markets and that is certainly a problem. There are no easy solutions except maybe having a quick access through your phone or ipad so that you can check on things easily without spending too much time or energy. Also, I tend to reduce positions before going on vacations.

-Can be frustrating: No one involved with the financial markets doesn’t go through periods of serious doubts where the market reacts in ways that are contrary to our models, our philosophy, etc.

Conclusion

As you can imagine, there are no perfect jobs or hobbies but I consider trading to be close to perfect for me. I can think of maybe one other job that could easily compete but more in that at some point in the future:) What are your thoughts on trading? How much do you enjoy it? And why?

Of course every region is different but the prices in the US have been more stable in the last year after falling off of a cliff.

The “bottom” of the real estate market will create a much more stable environment for owners of real estate and buying REIT’s (Real Estate Income Trusts) is something that passive income dividend investors should strongly consider. REIT’s typically offer good returns that include stable dividends.

There are many different ways to get exposure to the real estate market. Buying a REIT ETF is certainly a good way to do it and something that we have discussed in the past. But looking into the specific REIT’s can also be quite interesting.

Before getting started, you can see a chart of the S&P/Schiller Housing index and see that prices seem to have stabilized.

I took a look at REIT’s that pay dividends trying to find names that offer a high dividend and can afford to keep it going and even hopefully increase it. Take a look at the top REIT’s as per their dividend yield:

Ticker	Name	Price	Dividend Yield	Payout Ratio	Ex-Date
AGNC	American Capital Agency Corp	27.97	20.03	81.24	12/29/2010
IVR	Invesco Mortgage Capital Inc	21.9	18.26	49.27	12/28/2010
CYS	Cypress Sharpridge Investments Inc	13.48	17.8	18.95	12/29/2010
CIM	Chimera Investment Corp	4.26	16.9	74.81	12/30/2010
TWO	Two Harbors Investment Corp	9.26	16.85	N/A	12/27/2010
RSO	Resource Capital Corp	6.41	15.6	501.51	12/29/2010
NLY	Annaly Capital Management Inc	18.26	14.9	71.8	12/27/2010
HTS	Hatteras Financial Corp	29.8	14.77	93.4	12/22/2010
BMNM	Bimini Capital Management Inc	0.9	13.33	41.08	N/A
ANH	Anworth Mortgage Asset Corp	7.17	12.83	103.52	12/22/2010
ACMC	American Church Mortgage Co	3.35	11.94	239.07	N/A
NYMT	New York Mortgage Trust Inc	6.35	11.34	78.38	1/5/2011
MFA	MFA Financial Inc	7.95	11.32	93.8	12/30/2010
WAC	Walter Investment Management Corp	18.07	11.07	32.4	11/16/2010
ARI	Apollo Commercial Real Estate Finance Inc	16.35	9.79	N/A	12/28/2010
DX	Dynex Capital Inc	10.69	9.35	89.56	12/29/2010
CMO	Capstead Mortgage Corp	11.18	9.3	136.28	12/29/2010
NRF	NorthStar Realty Finance Corp	4.38	9.15	N/A	11/3/2010
ZZCPP	Corporate Property Associates 14 Inc	9	8.89	N/A	N/A
MSW	Mission West Properties Inc	6.99	8.58	168.76	12/29/2010
PCC	PMC Commercial Trust	8.15	7.85	122.92	12/29/2010
GOOD	Gladstone Commercial Corp	19.17	7.82	4194.97	11/17/2010
IRET	Investors Real Estate Trust	8.88	7.73	3765.87	12/30/2010
ADC	Agree Realty Corp	26.41	7.72	96.33	12/17/2010
CWH	CommonWealth REIT	26.1	7.66	518.27	12/17/2010
SUI	Sun Communities Inc	33.63	7.5	N/A	1/12/2011
HPT	Hospitality Properties Trust	24.11	7.47	152.6	1/26/2011
MNR	Monmouth Real Estate Investment Corp	8.24	7.28	N/A	11/10/2010
MPW	Medical Properties Trust Inc	11.01	7.26	159.27	12/14/2010
OLP	One Liberty Properties Inc	16.97	7.07	26.82	12/21/2010
FREVS	First Real Estate Investment Trust of New Jersey	17	7.06	150.05	N/A
RWT	Redwood Trust Inc	14.65	6.83	194.16	12/27/2010
UMH	UMH Properties Inc	10.59	6.79	222.72	11/10/2010
UHT	Universal Health Realty Income Trust	36.301	6.66	152.92	12/15/2010
PDM	Piedmont Office Realty Trust Inc	19.15	6.58	266.33	12/10/2010
STWD	Starwood Property Trust Inc	20.25	6.52	N/A	12/27/2010
GTY	Getty Realty Corp	30.13	6.37	113.39	12/28/2010
OHI	Omega Healthcare Investors Inc	23.74	6.23	137.14	1/26/2011
LTC	LTC Properties Inc	27.08	6.2	122.43	11/18/2010
IRC	Inland Real Estate Corp	9.2	6.2	940.72	11/26/2010
PTTTS	Palmetto Real Estate Trust	6.45	6.2	121.81	N/A
SNH	Senior Housing Properties Trust	24.56	6.03	156.29	1/18/2011
CSA	Cogdell Spencer Inc	6.73	5.94	N/A	12/29/2010
GOV	Government Properties Income Trust	27.96	5.87	0	1/19/2011
LRY	Liberty Property Trust	33.66	5.64	647.36	12/29/2010
PCH	Potlatch Corp	36.25	5.63	99.63	12/14/2010
DRE	Duke Realty Corp	12.32	5.52	N/A	11/10/2010
GRT	Glimcher Realty Trust	7.24	5.51	N/A	12/29/2010
EPR	Entertainment Properties Trust	47.39	5.49	N/A	12/29/2010
NNN	National Retail Properties Inc	27.69	5.49	243.85	1/26/2011

I would obviously ignore a few of the companies mentioned here since a few either:

-Have a payout ratio over 100% (paying more than they are making)
-Are not making any money at the moment (N/A payout ratio).

Those companies likely will be unable to continue paying their high dividends. Others however have a fairly stable dividend over 10% and seem Some of these companies have the ability to keep things up. I think the most important is to go over their financial statements to make sure that   their most recent financial statements show enough earnings and a positive “trend” (increasing revenues & profits ideally). So what is your opinion, do you expect to buy a REIT in your passive dividend portfolio?