The Best Way to Play Inflation – and This Profitable Housing Niche

Dividend Investing, ETFs, Preferred Shares
by Tim Plaehn
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The financial news has been full of stories about a rapidly slowing housing market. Higher mortgage rates have reduced affordability for new home buyers. Home builder and mortgage company stocks have taken a hit in the stock market.

However, there’s one sector of housing that should benefit from the turmoil with home buying…

If someone has been priced out of the home purchase market, either by high prices or high interest rates, they still must have a place to live. With the economy near full employment, workers are experiencing steady wage growth. Those who can’t or don’t want to buy a home will be renters, instead.

In the current real estate market, companies with rental properties have the upper hand. There is enough of a housing shortage and enough demand to allow apartment and single-family rental (SFR) owners to increase rental rates steadily.

A very new ETF now offers direct exposure to the real estate investment trust (REIT) categories that cover residential housing and rental rates.

The Home Appreciation U.S. REIT ETF (HAUS) is an actively managed exchange-traded fund that seeks to achieve its investment objective of total return by investing in publicly traded REITs that derive their revenue from the ownership and management of residential properties. The residential REITs fall into four categories.

  • Multi-family housing
  • Single-family rental housing
  • Manufactured housing
  • Senior housing

The fund is unique in that it vides pure-play exposure to residential REITs. While primarily market cap-weighted, HAUS employs an advisory board of housing and REIT experts to guide the fund managers on which REITs or subsectors to overweight or underweight. The ETF will own shares of 25 to 30 REITs.

Launched in March 2022, HAUS gives investors exposure to companies offering residential housing properties and services. The United States is experiencing a sustained structural housing shortage aggravated in recent years by a lack of building, creating short and long-term investment opportunities in residential housing.

Rental rates are a significant inflation component, so HAUS gives us a way to profit from the current high inflation rate.

If you are interested in the individual REITs owned by the fund, here are its top holdings as of July 21:

Investors are hot to find investments that protect against the effects of inflation. HAUS is one investment that should generate both share price appreciation and dividend growth. I’ll be following it – and more than two dozen other low-risk, high-yield stocks set to benefit from inflation in Dividend Hunter.

Author: Tim PlaehnTim is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory focused on creating a high-yield income stream and it's companion service The Dividend Hunter Insiders, Weekly Income Accelerator, a covered call trading service, and for investors looking for long-term total returns from their income investments using stocks with ever-growing dividend payments, he offers Monthly Dividend Multiplier. He co-edits POWR Income with Jay Soloff. Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F-16 Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U.S., Europe, and Asia. Tim graduated from the United States Air Force Academy with a degree in mathematics. In his free time he tours the United States parks, campgrounds, and wilderness areas in his travel trailer.
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