Do you know how to obtain a yield higher than the basic interest rate (Selic), which is currently at 13.25% per year?
One of the ways is by buying shares in real estate investment funds (FIIs). There are currently 18 assets of this type in Brazil that, if they continue at the current rate of dividend distribution, will have a return above the Selic rate in the next 12 months.
In today’s column, you will find out what these funds are and which ones I have in my personal investment portfolio. In addition, I also point out the “gotchas” that exist behind some FIIs that seem very good, but are not all that.
The survey considered only the most traded funds in the country (with a volume above R$ 1 million per day).
See below the list of 18 FIIs with dividend returns above the Selic rate.
- URPR11: +19.23%
- VGHF11: +17.03%
- HABT11: +16.93%
- HCTR11: +16.83%
- VGIP11: +16.27%
- ARCT11: +16.21%
- DEVA11: +16.06%
- KNIP11: +15.93%
- KNHY11: +15.35%
- KNSC11: +15.29%
- REC11: +15.01%
- VCJR11: +14.65%
- RZAK11: +14.44%
- VRTA11: 14.27%
- IRDM11: +14.05%
- CPTS11: +13.88%
- CVBI11: +13.88%
- BBPO11: +13.57%
Of the FIIs listed above, I have selected three for comment.
Those who follow my column will remember that I’ve talked about this background several times. Pudera: he is always among the most profitable in the country. The Urca Prime Renda fund, traded on the stock exchange under the code URPR11, has a dividend return of 19.23%.
This means that by investing BRL 100,000 in this paper today, you will earn BRL 19,230 over the next 12 months, if it continues to pay dividends at the same pace as last year. That is, you would have an approximate income of R$ 1,600 per month.
I emphasize, as always, that this return (as well as that of any other fund mentioned here) is not guaranteed. It will only occur if the FII maintains its current rate of shareholder remuneration.
A point of attention regarding the URPR11 is that its dividend distribution is quite unstable. For example, in March of last year, he paid investors R$2.87 per share. In the following month, the value dropped by about 60%, to R$ 1.18 per share. Thirty days later, it rose 76% to 2.06%.
If you are going to invest in this asset, be aware that each month you will have a surprise (good or not so) when you receive your earnings. I already had this asset in my wallet. I no longer have it because, for personal reasons, I had to reduce my exposure to risk.
KNIP11 is a paper fund, that is, it invests in real estate receivables. When you buy this asset, you start to receive the payment of mortgage installments on a monthly basis.
It is one of the main assets of my personal investment portfolio, for the reasons I explain below. First of all, it is a fund that seeks to invest in low-risk securities, so I feel comfortable concentrating a good part of my equity in it.
It is also worth mentioning that KNIP11 is the largest real estate fund in the country, with approximately R$7 billion in equity, and is also the most traded, with a daily volume of R$12.2 million. At least 40 FIIs have KNIPP11 quotas. This shows how the market, in general, trusts this fund.
The fact that it is managed by Kinea Investimentos, which belongs to Itaú Unibanco, the largest financial conglomerate in the country, also contributed to my investment decision. It is, therefore, a traditional and credible institution.
Another important factor is the history of the share price and the distribution of earnings. It is not common for this fund to have large variations in these two indicators from one month to the other, which makes it a relatively predictable asset, compared to other funds with similar returns.
But note that this is not a buy or sell recommendation. I just find it didactic to explain the way I make my investment decision. The responsibility for the final choice rests with each investor.
BBPO11 is a fund that holds properties used as branches of Banco do Brasil. I already had this fund in my wallet and I regretted it. I must confess that it was a miscalculation on my part.
At first, owning properties that are leased to the country’s largest state-owned bank may seem very safe. After all, BB reports billionaire profits every quarter; there is no reason to imagine that he could default on his contracts as a tenant.
In fact, the problem with this fund is not BB’s default. The problem is that bank branches are less and less necessary physical spaces. How many times a year did you go to an agency in the last 12 months? I believe I never went.
I believed that, because BB was state-owned, it would take time to close its branches. I knew that one day it would happen, but I didn’t expect it to be so soon. In August of last year, the fund announced that, of its 64 properties, six did not have their lease contracts renewed. As a result, the distribution of earnings fell by 24%.
At that moment, I realized that it wasn’t worth continuing to speculate in the bank branch market. I sold my shares and assumed the loss.
Be careful when comparing with Selic
The comparison between the Selic rate and the dividend return of real estate funds, although interesting, is not very fair.
First, because the earnings of FIIs are exempt from Income Tax, while the main Selic-linked security (the so-called Treasury Selic) is not. So the real estate fund already has an advantage here.
Second, but not least, earnings are not the only way to make money from FIIs. It is possible to make a profit if the share price goes up. For example, if you invested in a fund when it cost R$100, and sold it when it was R$120, you had a capital gain, in addition to the money you received in the form of earnings.
It is always good to remember that real estate funds are variable income assets and have more risks than fixed income investments such as Treasury Direct, CDBs and others.
There is always a chance that the fund will reduce the amount of dividends distributed, sometimes significantly, as happened with BBPO11.
In addition, the share price may vary downwards. Above, I gave an example in which an investor buys a share at R$100 and sells it at R$120. But it can also happen to buy for the same amount and then the price drops to, say, R$80. In this case, if the investor needs to sell the asset, he will have a loss.
Do you have any questions about this text or about investments in general? Send your question through my Instagram account. Your question may be answered in this column soon.