RFI – Cohen & Steers Total Return Realty Fund – Overview & Analysis

My quest for higher yielding investments continues.  My timeline of when I am trying to use my dividend income is in the next 5-10 years so based on my analysis in a previous post, a higher dividend will be more beneficial for my goals instead of a lower dividend with high dividend growth. This search led me to RFI – Cohen & Steers Total Return Realty Fund and I recently opened a new position. 

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RFI is a closed end fund from Cohen & Steers.  Per their website, RFI’s objective is to achieve a high total return through investment in real estate securities.

I am a big fan of the Real Estate (REIT) asset class and this fund fits into my desire to increase my exposure.

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RFI – Cohen & Steers Total Return Realty Fund Overview:

RFI currently has 167 holdings including the top 10 (48% of the fund):

• American Tower Corporation 
• Prologis Inc.
• Public Storage
• Welltower Inc.
• Invitation Homes Inc
• Realty Income Corporation
• Duke Realty Corporation
• Equinix Inc.
• Extra Space Storage Inc.
• Simon Property Group Inc.

The fund is well diversified within the Real Estate sector, with holdings in the majority of the REIT categories, as shown below.

The Fund does not use leverage, which is one of the appeals of this Fund for me.  A lot of CEFs use leverage, which can accelerate returns during good times, but can also cause larger losses in bad times.

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Facts about the Fund:

Inception Date: 09/26/1993 (29 years)

Annual Expenses: 0.89% (which is on the lower end for CEFs)

Monthly Distribution: $0.08 per share ($0.96/year)

Special Annual Distributions were paid in 2020 and 2021 of $0.05 and $0.21

The current distribution is $0.08 per share and is a managed distribution.  The yield is just over 8% and is paid monthly.  

The current valuation of the fund, as measured by discount/premium to Net Asset Value (NAV), is +3.77%, meaning that fund is slightly overvalued at this time.  The historical discount is -3.28%.  I plan on buying regularly over time via dollar cost averaging so I am ok with paying a premium at this time.

The main goal of RFI is the current income, but the total return has also been quite satisfactory as well. As shown below the fund has outpaced the S&P500 over time. While past performance is not guaranteed in the future, it shows that this fund has the ability to provide market-beating returns while giving current income to those who need it.  The 52 week range for the share price is $11.68-$17.50, so the fund trades on the lower end of that range at this time.

Conclusion:

RFI is a quality CEF from a leader in the investment management industry.  Their distribution provides good current income and potential growth and special distributions.  The total return is satisfactory and meets my needs for my portfolio.  As always, do your due diligence, what works for one investor may not work for you.  I am focused on higher dividend yields due to my short timeframe.  Those investors with a longer timeframe may benefit from lower yield and higher dividend growth.