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FULL DISCLOSURE:
I am not a financial advisor. This post is to provide information and not provide financial product advice. I discuss why I personally chose to invest in a stock, ETF, REIT, investment fund or cryptocurrency (which I have held for over a week) and also share information that is public about the following stock, ETF, REIT, investment fund or cryptocurrency and they are based on my own personal opinion.
I will not blog about any positions of stocks, ETFs or REITS and cryptocurrency which were initiated just within the last 72 hours of posting this blog article.
It is recommended that you should always consider visiting a financial advisor for independent financial advice before making investment decisions.
I do not work in the financial industry, so just because I write about it, doesn’t mean you should own it. So, consult with a financial advisor and do your due diligence, RESEARCH!
I am not receiving compensation by the company for this blog post.
I have no working relationship with any company whose stock, ETF, REIT or cryptocurrency mentioned in this blog post. Nor do I have a family member or friend who works with the company.
I invest in real estate.
But not the same way as some of my friends do it, those who do property management and those who purchase many homes and rent them out.
I invest in REITs (Real Estate Investment Trusts), companies that own or finance income-producing real estate across a range of popular sectors. And to qualify as a REIT, they trade on major stock exchanges and offer benefits to their investors.
For many people who invest in REIT’s, they are all in it for the dividends.
I know, some of you are scratching your head and wondering, why?
Well, for one, I have had family and friends who have invested in real estate. And I have seen friends become wealthy because of their investments. I’ve also seen the other side when they had a lot of property and renters who lost their jobs, unable to pay rent or damage the homes, leaving the real estate investor in debt.
I respect those who invest in real estate and were able to focus on it and earn amazing passive income from it.
While I wish that I would have done that when I was younger, the older I get, the more I become more conservative towards my investments. Not wanting high risk but wanting to make sure that 20 or so years from now, I am earning passive income through what I invested when I was younger.
And if I did want to get into real estate, my thoughts were not apartment complexes or homes, I wanted to have a stake in buildings, high rises, warehouses, medical facilities and more.
While I didn’t pursue that course of action when I was younger, I am investing in buildings, high rises, warehouses, medical facilities and more through REITs.
Investing in a REIT allows me to invest in real estate without having to go out and buy, manage or finance a property. What a REIT does is lease a space and collects rent on its real estate and the company generates income which they pay out to their shareholders. In fact, a REIT must pay out at least 90% of their taxable income to shareholders. And shareholders will need to pay the income taxes on those dividends.
For me, this is doable and I can contribute towards a REIT like I do with other investments and the more you put into it, I hope to see it pay off many years later.
One of the more popular REITs that I invest in is Realty Income, The Monthly Dividend Company (NYSE ticker symbol: O).
Now, what is Realty Income, The Monthly Dividend Company? Their portfolio as of May 2021 features 6,600+ commercial properties, 98.0% portfolio occupancy and 56 different industries in 49 states.
The majority of their clients are Walgreens (248 leases), 7-Eleven (431 leases), Dollar General (804 leases), FedEx (41 leases), Dollar Tree/Family Dollar (552 leases), Circle K (273 leases), CVS Pharmacy (88 leases), Home Depot (23 leases), Wal-Mart/Sam’s Club (57 leases) and many more!
The majority of their properties are in retail (6,483), industrial (121), office (43) and agriculture (15).
On April 29th, Realty Income merged with VEREIT in all-stock transaction, creating a combined company with an enterprise value of approximately $50 billion. Under the terms of the agreement, VEREIT shareholders will receive 0.705 shares of Realty Income Stock for every share of VEREIT stock they own.
Realty Income To Merge With VEREIT In All-Stock Transaction https://t.co/xU9P3p7mLz
— Realty Income (@RealtyIncome) April 29, 2021
And on April 13th, Realty Income Corporation, the Monthly Dividend Company, announced that its Board of Directors have declared the 610th consecutive common stock monthly dividend. The dividend is $0.235 per share, representing an annualized amount of $2.82 per share, which is payable on May 14, 2021 to Shareholders of record as of May 3, 2021.
Source: Schwab.com
As of May 13th, the company closed at $64.71, my investment strategy is to try to own around 100 shares of Realty Income, the Monthly Dividend Company per year. Knowing that dividends is $2.82 for one share annually. 10 shares ($647.10) would be $20.82, 100 shares ($6,471) would be $200.82 yearly, 1000 shares ($64,710) would be $2,000.82 yearly. Will I be able to own 1,000 shares? Granted, I’ll be buying more on the dip but I don’t know if I’ll reach 1,000 shares but I do believe 100 shares is doable as I have other positions that I want to put more into for diversification in my portfolio.
Source: Schwab.com
But for me, I hope I can stay on course as I do have a high conviction towards Realty Income, The Monthly Dividend Company.
The company appears to have been consistent with their dividends and their annual dividend yield is 4.36%. The company has a market cap of $24.2 billion and their enterprise value is $32.6 billion and shares outstanding is 373.5 million.
In a Morningstar report and Business Strategy & Outlook, Kevin Brown, an Equity Analyst wrote, “Realty Income is the largest triple-net REIT in the United States, with more than 6,500 properties that mainly house retail tenants. The company describes itself as “The Monthly Dividend Company,” and its line of business and operating metrics make its dividend one of the most stable sources of income for investors. Even though over 80% of Realty Income’s tenants are in retail, most are focused on defensive segments, with characteristics such as being service-oriented, naturally protected against e-commerce pressures, or resistant to economic downturns. Additionally, the triple-net lease structure places the burden of all operational risk and cost on the tenant and requires the tenant to make capital expenditures to maintain the property rather than the landlord. These leases are often long term, frequently 15 years with additional extension options, which provides Realty Income a steady stream of rental income. Coverage ratios are also very high, so tenants are healthy and unlikely to request rent concessions, even during downturns. The steady, stable stream of revenue has allowed Realty Income to be one of only two REITs to be members of the S&P High-Yield Dividend Aristocrats Index and have a credit rating of A- or better. This makes Realty Income one of the most dependable investments for income-oriented investors, even during the current coronavirus crisis”.
There is of course more to Kevin Brown’s Morningstar report, so please review this report. It’s important to do your research and read on the bull and bear reports. Brown did a wonderful job breaking down his reports on the company.
I know one of the concerns from Brown is that the company has no moat (no sustainable competitive advantage)
For me, currently I have high conviction towards Realty Income and how it handled business during the pandemic and have even better expectations as we start to gain some normalcy. I understand concerns of rising interest rates and inflation, but I like their portfolio and I like their belief in stability, but their quality portfolio made me look at this company and invest in it long term. We’ll see how things go!
But as always, perform due diligence and do a lot of research before investing. Talk to a financial advisor and find out if Realty Income, The Monthly Dividend Company is a perfect investment for you.
