Realty Income, symbol O, has been in my portfolio for many years. I learned of this company from Morningstar research and liked what I read. Further research confirmed to me their belief that Realty Income was as good a company as you could buy when it comes to being shareholder friendly. Realty Income does shareholder reports that lets you know everything that is going on in the company, good and bad. They continually look to squeeze every single dollar of profit out of their portfolio of real estate holdings.
The triple net leases they use basically puts any increases in property taxes and many expenses on the local renter. It also, in my opinion, makes the renter a partner with the building owner and that makes for good relationships long term. Realty Income in return will work with renters to keep them renting since they like and encourage long term leases and long term partners. This real estate investment trust specializes in single tenant free standing buildings such as convenience stores, small restaurants, and other retail that are in high traffic locations. They have in the last year bought some larger multi-tenant buildings, but for the most part it is single tenant. They also are mortgage free desiring to buy buildings with shareholder money and free cash flow without taking on debt.
However the thing I like most about Realty Income is that they pay a monthly dividend. Now that is what I call shareholder friendly. The company says right up front they like shareholders who are buy and holders and reward such shareholders. They also increase their dividend quarterly and have done so for so long I no longer keep count. Oh, it is a small increase, but it IS an increase. Currently the stock is selling around $31.80 per share and pays a $1.74225 annual dividend about 5.5%. It is not a tax advantaged dividend, but it is solid and growing. For many retirees who have monthly bills this stock helps you pay for them.
Realty Income has traded between $30 and $35 per share for a good bit now and frankly I believe it is fairly priced in that range. A reliable dividend payer with very low risk should trade about 5.0% dividend or so and that is where it is now. If the market trends lower Realty Income will continue to pay you a nice dividend, if the market trends higher you could sell for a nice capital gain.
Now if you trade call options, and basically anyone who has an account can qualify, there is a sweet little kicker here to boost your income. Realty Income has monthly call options and generally the option price runs from a low of 15 cents per share to 75 cents per share. Of course the price varies depending on volatility in the market and how close Realty Income gets to the $35 strike price. But added to the current 14.5 cents monthly dividend you could double, triple, sometimes more your monthly take. Add in if the stock hits $35 and gets called away you get the $1.50 or so of capital gains too. Then you just wait until the price drifts down again and buy in and do it all over again. As a monthly dividend there also is no need to deal with call options and ex-dividend dates As a trader this is one way I make double digit annual profits on stocks and frankly you can too.
I own Realty Income long, and as a call and put option.
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