REITs Among 'Hottest Stocks Of The Year,' Momentum Expected To Continue Through 2015

Looking back at some of the hottest performing sectors in 2014, Real Estate and Investment Trusts (REITs) rank near the top.

The Wall Street Journal reported on Tuesday that REIT stocks were not only among the hottest stocks of the year, but saw some of the largest gains in nearly a decade as company's benefited from an improving economy and low interest rates.

REITs own properties ranging from apartments, warehouses and office buildings and historically benefit from low rates. Yields on the 10-year Treasury note fell from 3 percent to 2.191 percent between the start of 2014 through Tuesday.

As a whole, the group has outperformed Pharmaceuticals, Tobacco, Textiles and Apparel companies but lagged Airlines and Biotechnology.

Looking forward to 2015, some analysts are forecasting the Federal Reserve to raise its short-term rates which may not bode well for the industry. However, WSJ states that some analysts are still bullish on REIT stocks heading in to the New Year.

“Shifts in interest rates alone don't set the tone for REIT performance, and sometimes can be drowned out by other factors,” the publication stated. “In 2015, a stronger economy and increased mergers-and-acquisitions activity could overshadow rate rises, helping to power REIT returns.”

The top-performing REIT in 2014 was Winthrop Realty Trust FUR, a firm that specializes in acquiring distressed office properties that announced in May it will liquidate its assets. Shares rose more than 68 percent this year.

The second-best performing REIT firm was Texas-based shopping-center owner AmREIT Inc AMRE that produced returns of 62.6 percent throughout 2014.