National Storage REIT (ASX: NSR) is one ASX 200 real estate investment trust (REIT) that has started 2020 strongly.
The National Storage security price closed 1.03% higher at a new 52-week high of $1.97 per share. All in all, the group’s securities are now up 7.07% to start the year.
So, why is National Storage climbing higher on the ASX and should you be buying in 2020?
Why the National Storage security price is climbing higher
These strong capital gains have come despite no market moving news from National Storage so far this year. The ASX 200 REIT specialises in self-storage units and is currently yielding a tidy 4.97% per annum.
The self-storage group’s securities also started trading ex-dividend on 30 December 2019, meaning the upcoming dividend is not included in its current valuation.
However, the new year can bring about lots of short-term movements as investors rebalance and reposition their portfolios.
It could also be that people are buying in amidst the ongoing property boom. With house prices going up, more people are buying and selling with cheap credit.
That in turn can mean people potentially have more demand for storage units run by National Storage to keep all of their belongings as they move between houses.
Whatever the reason, a 7.07% gain so far in 2020 is a strong start to the year in anyone’s books.
Should you buy into National Storage?
The real benefit of ASX 200 REITs is that they provide diversification and strong income.
National Storage’s 4.97% dividend yield is attractive and better than many ASX dividend shares at the moment.
National Storage also offers an easy way to invest in commercial real estate and diversify your holdings. Generally, commercial real estate is less cyclical than company earnings in many industries, meaning it could maintain its dividends even in a downturn.
Finally, ASX 200 REITs offer an easy way to invest in an otherwise un-investable asset class. Most of us don’t have the money to go into direct commercial real estate, and even if we did, it would be heavily concentrated in one asset.
If you’re looking for strong earnings and portfolio diversification, then National Storage could be a buy in 2020.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended National Storage REIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.