The following is an excerpt from a piece I wrote for InvestorPlace. You can read the full article here.
I’ve always been a big believer in taking a total return approach to investing, focusing on both capital gains and income. And with the capital gains looking a little more iffy than usual at current stock prices, current income in the form of dividends is more important than ever.
So with all of that said, let me introduce you to one of my very favorite dividend workhorses, conservative retail REIT Realty Income (O). Realty Income owns a portfolio of over 4,700 properties scattered across 49 states and Puerto Rico. And while the property portfolio is extremely diversified, spanning 247 tenants in 47 distinct industries, the properties all have one thing in common: a triple-net lease.
Under a triple-net lease arrangement, the tenant rather than the landlord pays all taxes, maintenance and insurance. The landlord’s responsibility really is limited to cashing the rent checks and occasionally finding a new tenant or negotiating a new lease. Not bad work if you can get it!
Realty Income is about as close to a bond as you can get in the stock market. Its triple-net leases give the cash flows excellent stability and predictability, as does the quality of its portfolio and tenant base. Realty Income tends to focus on standalone retail properties in high-foot-traffic areas. Your neighborhood Walgreens or CVS pharmacy would be a fine example.
But while the dividend may be “bond-like” in its stability, O stock has done an incredible job of raising it over the years.
You can read the full article here.