Posted on 02/19/2009 6:34:27 AM PST by Candor7
Awesome graphic! Okay if I steal it?
There are some good bargains to be had in the stock of small, competently run banks, that’s for sure!
Disseminate it far and wide!
None of those guys want to be in the real estate business or the construction business. They want to make money selling fast food, liquor, beer, snacks, gas, etc. Realty Income makes that possible. They own all those properties, admininster them, pay tax on them, deal with the local authorities on the myriad issues (keeping the signage in compliance with local codes, etc.) Every month the Burger King franchises of the world, etc. just write a rent check to these guys. Every so often, they raise the rents just slightly.
These restaurants and quick stops stay in the same location for DECADES, and just pay rent. They don't change hands. They don't go out of business. They just pay Realty Income every month to handle all that aggravation, and concentrate on selling their food and beverage stuff to the retail market they target.
Realty does NOT go buy 4000 acres somewhere and try to start a master planned community. So yeah, they are "commercial" real estate, but they don't lease offices that empty out of clients when business busts happen. Their properties are about recession-proof, virtually depression-proof, if you think about it. At any given time, their properties are about 98.5% leased. Turnover is very low.
The price of the stock has varied from about $15 per share up to $32 per share over the last decade. You'll never see this stock triple two years in a row. It's not designed to do that. It's strictly an INCOME stock.
The dividends are small, about 11.5 cents per share right now - but they are paid MONTHLY. Cumulatively, their 12 monthly dividend checks total about 8-9% dividends per year, and it increases just a little dab every year, rain or shine. On years when the market makes 35% in NASDAQ stocks, their returns are anything but exciting. In times like these, they are solid gold.
On the company's home website, they have a nickname for their company ... The Monthly Dividend Company. I don't have the link at hand, but check them out.
Thank you, Candor, for the fine article. Glad to see my family’s three banks are basically OK.
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