Many investors consider real estate investment trusts (REITs) to be generally boring investments. REITs tend not to have fast-growing businesses, are not particularly innovative companies in most cases, and are designed to generate above-average levels of income for their investors, which is why many It’s no surprise that people feel this way.
Many REIT businesses can certainly meet a reasonable definition of “boring”, but that doesn’t make them a bad investment, quite the opposite. real estate income (〇 -1.17%) is a particularly interesting example of REIT It’s designed to be boring in every way, and has performed great for investors over the years.
Realty Income’s business is boring by design
Realty Income owns approximately 11,400 properties in the United States and Europe. It specializes in single-tenant properties, with the majority of tenants being retailers.
However, this is not just another retail inventory. Most Realty Income tenants are either recession-proof, e-commerce headwinds vulnerable, or both. walgreens, General DollarWhen fedex These are just a few of the company’s largest tenants.
In addition to retail operations, Realty Income owns a significant amount of industrial real estate and some agricultural properties. Additionally, the company recently entered the gaming real estate space with the high-profile acquisition of Encore Boston Harbor.
In addition, real estate income net lease structure It increases stability. A net lease is a commitment by the tenant to pay property taxes, insurance and most maintenance costs, essentially covering all the variable costs of owning the property. Additionally, net leases typically have longer initial terms (well over 10 years) and incorporate annual rent increases. With Realty Income, all you need to do is acquire properties with quality tenants and enjoy predictably growing income for decades.
Stock performance is the most boring thing about it
Realty Income has been around since 1969 and first went public on the NYSE in 1994. Since going public, the company has provided investors with an annualized total return of 15.1% and has maintained an impressive performance record for nearly 30 years. To put this into perspective, the company’s $10,000 investment when it went public on the NYSE in 1994 (which was already a well-established business by this point), assuming all dividends were reinvested along the way, was $10,000. , today is worth about $456,000.
For income seekers, Realty Income has a dividend yield of just over 5% and is paid in monthly installments. (Fact: Realty Income has a trademark for the phrase “monthly dividend company.”) The company has made his 627 consecutive monthly payments to its shareholders and has made 100 consecutive quarterly payments. Increased.
Important Lessons to Learn
Property income is a great example of a very important investment lesson to learn. Whether your business is exciting or not has as little to do with investment potential as you might think. While some of the world’s most exciting and innovative companies have created terrible returns for their shareholders, Realty Income’s simple and predictable business model has yielded life-changing wealth for long-term investors. rice field.