Dividends from FIIs: The investment needed to earn an income of R$5,000 per month is almost halved in two years.

Dividends from FIIs: The investment needed to earn an income of R$5,000 per month is almost halved in two years.

The real estate fund market – or FIIs, as they are also known – currently offers one of the greatest opportunities for generating passive income in recent years, according to experts on the subject. And the reason for the prices: With current prices, the investment needed to get an income of R$5,000 per month from investing in fishery industries has almost halved, compared to what it was two years ago.

Survey carried out at the request of Infomoney By Michael Ferriato, strategist at Casa do Investidor, explains that the rate of return with dividends (profit return) Of the theoretical portfolio of Ifix – an index that aggregates the 106 most-traded real estate funds on B3 – it was 11.34% in the twelve months ending July 2022, roughly 1% per month.

With this percentage, the investor who was able to reproduce the Ifix portfolio would need to invest R$ 528 thousand in FIIs to get an income of R$ 5,000 per month.

Two and a half years ago, in March 2020, the situation was different. a profit return At the time, Ifix reached its lowest level in the past 10 years, 6.43% in 12 months. At a lower rate, the investment required to reach an income of R$5,000 per month was almost double: R$931,000.

Check the chart below to see the evolution of the investment required to earn an income of R$5,000 per month with FIIs over time:

Source: Michael Ferriato, strategist at Casa do Investidor

This is not the first time profit return Ifix averages up to two-digit levels. According to Veriato’s survey, the index’s rate of return reached its highest point in the past 10 years in March 2016, when it was 11.85% in 12 months. This ratio required an investment of R$506 thousand in the fisheries industries in order for the investor to earn an income of R$5,000 per month.

What are real estate funds and how do they work?

According to data from B3, the Brazilian stock exchange, more than 1.7 million Brazilians are currently investing in real estate funds, which is an alternative way to invest in real estate without having to buy one.

Roughly speaking, real estate trusts raise money in the market to acquire properties that can be rented or sold later. The income obtained from transactions – leasing or capital gains – is distributed among the shareholders, in the proportion in which each of them has invested.

Generally, dividends – or dividends – are deposited monthly into a shareholder’s account. Resources are exempt from income tax, which is an advantage for real estate trusts.

Over the years, the manufacturing market has developed and today there are specialized funds: from office management to negotiating rural real estate, through shopping centers, logistics warehouses, hospitals, bank branches and even cemeteries.

In the market, investors also have the option of “paper” FIIs, which invest in fixed-income securities related to the real estate sector. The papers are indexed to price indices and to the CDI (certificate of deposit between banks) and have benefited in recent months from the country’s high inflation and interest rates.

Veriato points out that real estate funds are variable income investments, which means that the value of the shares and the value of dividends can vary over time and according to the operations the funds carry out.

Ifix’s theoretical portfolio – which served as the basis for Viriato’s study – is currently made up of more than 40% of “paper” funds, a share that demands the attention of an investor who dreams of a return similar to that of profit return current pointer.

And what caused the increase in the returns of profits from the fisheries industries companies?

One of the main reasons for the increase in Ifix’s revenue from 2020 onwards was the depreciation of the B3-traded FIIs stock. a profit return It is precisely the result of the relationship between the total dividends paid out in a period and the price of the fund (or funds, in the case of Ifix).

Like other risky assets, FII has suffered from the effects of the COVID-19 pandemic, which has imposed movement restrictions in malls and office buildings and hampered the operations of funds operating in these sectors.

In Viriato’s assessment, two other factors explain the devaluation of the FII: an increase in state interest rates and an increase in risk aversion in the financial market. “Today we are witnessing something similar to what happened in 2015, when interest rates were very high, as well as risk aversion in the face of discussions about Isolation Then-President Dilma Rousseff,” he explains.

The Selic National Economy Base Rate has increased from 2% in January 2021 to currently 13.75% annually. The higher the index, the higher the dividend for fixed income investments, which offer less risk than products like fisheries companies, notes Henrique Castiglione, partner and commercial director at EWZ Capital.

He explains that “the increase in interest stimulated the migration of investors from variable income to fixed income, which led to a decrease in the value of real estate fund shares.”

The move primarily affected “mud” funds, which invest directly in real estate, as “paper” FIIs makers have also benefited from higher interest rates and inflation, driving up dividends in recent months.

The combination of consuming stocks for part of the market and higher earnings for the other half of the sector capped Ifix’s income boost, Castiglione concludes.

Discover the step-by-step guide to living on income with FIIs and receiving your first rent in your account in the next few weeks, without the need to own property, in a free semester.

Who said it was easy?

For Rodrigo Medeiros, creator of the information platform DesmistificadondoFIIs, today’s market presents one of the best opportunities in the past 10 years to generate income from real estate funds. However, he warns: Follow profit return Ifix is ​​not easy – and not healthy from an investment strategy point of view.

“To earn 1% per month, an investor’s portfolio would have to be heavily loaded with ‘paper’ FIIs, as is the case with Ifix’s theoretical portfolio today,” he warns. “Variety Wallet [com fundos de vários segmentos em proporções semelhantes] 6% did not generate profits in the first quarter,” he adds.

Additionally, Medeiros states that “paper” FIIs earnings should suffer a decline in the coming months due to the contraction measured by the Consumer Price Index (IPCA) in July, which came in negative 0.68%.

This does not mean that the specialist discourages the investor and makes a comparison between today and the market eight years ago, the period that witnessed the highest dividends.

In 2014 and 2015, the returns were higher, but the market trend was downward. Today, dividends are slightly lower than they were in the period, says Medeiros, who also draws attention to the potential for capital gains with FIIs that are trading at less than book value.

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