Real Estate Investment Trusts are cheap now. The stocks have oversold, as investors overreacted to expected U.S. Treasury rate increases this year. Since the beginning of the year REITs are down 2.54% versus a 2% gain for the S&P 500.

And yet, the Federal Reserve doesn’t appear to be in any hurry to raise rates. Last week Fed Chair Janet Yellen said that she would raise rates this year only if the economy met her economic forecast.

Don’t bet on the economy catching fire anytime soon. A recent analysis by Bloomberg shows that since 2012 Fed policy makers have consistently overestimated the strength of the economy.

So, it’s possible that rate hikes will be more modest than expected.

But even with rate hikes, REITs are a good deal, which gives us more faith in the Global Income Edge eight-REIT portfolio.

For example, during rate hikes REITs have generated an average annual return of 11.4% over the six monetary tightening cycles that have occurred since 1979. And over the seven periods since 1979 when U.S. Treasury yields were rising, REITs generated an average annual return of 14.9%, according to a report by Cohen & Steers.

And three Wharton professors recently found the two assets providing the most dependable inflation protection have been commodities and equity REITs. Commodities equaled or exceeded inflation during 70.4% of high-inflation periods and equity REITs were close behind at 65.8%.

For example, inflation in the U.S. was 13.5% during 1979, the worst inflationary year since 1947. But dividend income from REITs averaged 21.2% that year, and total returns amounted to 24.4%.

So we hope investors will always keep in mind the value of diversification which REITs can bring, even as we recognize how powerful the promise of rate hikes in U.S. Treasuries can be to any income investor

Portfolio Update

Our #2 REIT Best Buy Omega Healthcare (NYSE: OHI), which specializes in skilled nursing facilities, recently completed the merger with nursing home REIT Aviv, which significantly expands the company’s portfolio from 560 to 900 properties.

The company predicts funds from operations in the fourth quarter of this year will be 10% higher than fourth quarter 2014. On April 1the company’s dividend was raised for the 11^th consecutive quarter.

We believe healthcare REITs have a demographic edge given the millions of aging baby boomers that will require specialized healthcare solutions. OHI is a Buy up to $45.

EPR Properties (NYSE:EPR) is a specialty REIT that invests in entertainment, recreation and education-related properties in the U.S. and Canada. It has 230 properties in 39 states worth $4.1 billion. In quarterly earnings results issued in late April, the company reported $1.03 earnings per share for the quarter, beating analyst estimates. The company had revenue of $99.44 million for the quarter, compared to the consensus estimate of $77.43 million.

The REIT pays shareholders a generous and steadily growing dividend currently at 6.2%. And the company’s properties are full: Its 99% lease rate generates lots of cash, which can be used to buy more properties. Since the financial meltdown, EPR’s share price has climbed 45% and its dividend has grown at an annualized rate of 6%.

Roughly two-thirds of the REIT’s operating income is generated by its entertainment segment, which consists of 135 megaplex theaters, nine entertainment retail centers and six family entertainment centers. All of its megaplex theaters are leased by 16 different theater operators. EPR is a Buy below $68.