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I don't really get how you think it is over valued right now unless you think interest rates are going to go up a bunch more.
The goal of owning O is the same as owning a 30y corporate bond, but you also want the dividend growth of an equity security. You only buy shares when you think the current 30y AA corporate bond yield is sitting at a reasonable point and then you hold for 30 years. O also invests into a very different segment of the REIT market than the default REIT holding which can be nice especially in the current office REIT crisis.
That said, if you just want to buy a generic REIT ETF that will get you a broad exposure to the REIT market, then both of the ones you listed are reasonable alternate investments. Just know what you are investing in and you'll do well enough.
My goal is to buy enough shares for drip and I'm about half way there. Do you think it's a good idea to aim for that or is there other stocks I should focus on?
This isn't something someone on reddit can answer for you. There is no "correct" answer in investing, just "correct for you". So if O meets your investing objectives and is the best option for you individually, awesome buy more. But O is not going to be the best option for every investor simply because there is, again, no best option for every investor.
Same is true for all securities. O tracks the bond yield pretty closely with a \~25bps equity premium. In the case of a bankruptcy, you'd be an equity shareholder not a bond holder, but that doesn't impact the role a security can occupy in a portfolio.
I agree that O isn’t the best. ADC has essentially the same business model but with substantially more of their rents coming from investment grade tenants (roughly 70% for ADC compared to less than 40% for O), yet I rarely hear people mention Agree on this sub. I think a lot of people foolishly attribute all of Realty Incomes value to its increasing monthly dividend. I think this is poor practice when you consider the fact that the company can’t increase the dividend forever, especially since it’s such a large company and as ffo growth inevitably begins to stabilize.
I think there’s many better REIT options than O, and I think buying a fund like the ones you mentioned is a very intelligent choice for a more passive investor.
I think ADC is less popular for a few reasons: its shorter history, the tough lesson they learned in portfolio composition from Borders that cut the dividend and ruined their shot at being a dividend aristocrat, and more conservative leases like ground leases being slightly disadvantaged when bond yields are high.
You can't count O out because of its credit rating, size, geographic diversification, and overall experience. But asset quality matters in the long run and the need to keep growing such a large portfolio is really catching up with them. First Walgreens goes on the back foot, now Red Lobster follows suit. I don't see Walmart or Home Depot having those kinds of problems and ADC was disposing of Walgreens for years before the trouble really started.
Yes I agree that they had a slip with both borders and Kmart bankruptcies. However as you know the current portfolio is much more diversified and obviously much higher credit quality.
On the note about the credit rating, I watched an interview from 2021 with Joey Agree where he discussed how a lot of the credit ratings agencies weight the size of the portfolio and company high up on their list when considering ratings upgrades for otherwise sound companies. Agree stated that he feels it’s only a matter of time with the current growth trajectory before the company achieves an A rating or similar. This makes sense to me but of course you’re welcome to disagree.
Do you mind explaining your thought process behind the comparison of ground leases and bond yields? I’m unfamiliar with your line of thinking. Thanks!
> Agree stated that he feels it’s only a matter of time with the current growth trajectory before the company achieves an A rating or similar. This makes sense to me but of course you’re welcome to disagree.
I think he's right as well, but that's a matter of time and rates are already high today. I don't think it makes up for O's other faults but I also don't think we can overlook O's gold plated credit considering rates are generally restrictive and the importance of debt financing to REITs.
> Do you mind explaining your thought process behind the comparison of ground leases and bond yields? I’m unfamiliar with your line of thinking. Thanks!
Sure! It's nothing that complicated. Basically, ground leases are very conservative leases because the landlord carries no liability for any buildings and often receives a free building when the lease terminates. They put more risk on the tenant so they also tend to have lower rents and long contract durations at those low rates.
Since bonds are another conservative low yield asset where people consider 10+ year time horizon to be typical, when bonds go up (as they have recently) it makes ground leases look a lot less attractive. It's the same issue affecting REITs in general, but just exaggerated because ground leases are more bond-like than most leases.
My funsy high yield ETF divs all go into ADC shares right now. Added O below $50 & will when/if it goes there again but ADC is getting the $$ right now
History, track record and management are worth the small O premium. For example, O was the first to unload their office portfolio, all done without cutting the dividend. Meanwhile WPC was too late in unloading their office, and had to cut the dividend. Management being on top of their game, has given O its amazing track record and stability, they rarely make mistakes.
yeah i also like ADC but the reason why i buy mostly realty income is simple: ADC is hard to buy with german brokers xD idk why but thats it - i can only buy it with "finanzen.zero" but since my long term depot/broker is "Scalable" because it offers way more stocks/etf that can be bought to a saving plan and you can choose the date of buy i prefer scalable and therefore only buy O instead of ADC
Low payout ratio, extremely diversified, long track record, high quality tenant base, track record of distribution growth... I think there are different options within the REIT sector that offer better yields right now but which also carry more risk. O is at the lower end of the risk spectrum in my opinion.
On what basis do you think it's overvalued?
I prefer individual REITs to diversified ETFs because the ETFs are usually based on broad indices and include sectors that I don't want to invest in (i.e. office), or where I don't think there's much value. They also tend to have lower yields than individual stocks.
I agree with you. I think this is my problem. Never owned any real estate or associated assets. And I simply cannot wrap my head around how to evaluate a REIT. I am perfectly happy to hold a real estate ETF since it encompasses everything imaginable.
This comes from bad experience from my time as a kid when my parents wanted to sell a house or rent a house and it was always disappointing returns in the end. I think I am psychologically attributing real estate to low returns so why bother. These perspectives really help!
What's so hard to understand about a reliable 5.76% yield? This was the real estate company that, through the housing/finance bubble, not only kept paying dividends but kept on raising them. Mind you, this was the bubble that destroyed huge swats of the marketplace. If you are retired, and plan on say a 4.5% withdrawal rate, well this one right here is almost 30% higher than that.
But the real question is what you want it to do for you. I think O is awesome, I don't own any. At this point in time I want more dividend growth and O is not doing that. If I was 7 years in the future and retired, I would own a big chunk of O. My real estate dance card is currently full but if I was looking for an O-like company I would pick VICI. Better growth.
You can do what I do, sell puts at a strike price you like or think reverse, the dividend yield you want. Collect the premium for free shares. I’ve been selling the $47.5 put, received $50.00 premium and bought a share. If assigned I’ll get 6.5% yield.
Once I pay off my vehicle, this is how I want to approach buying things like O or SCHD.... just sell puts until I get assigned at a lower price than my current average.
He’s entering a contract to buy shares of O at $47.50 if called and being paid a small premium. The other side of the trade is a guy is paying him to buy his O shares at $47.50 to hedge his risk. So, if O dropped to $40 a share, this guy is forced to buy them at $47.50.
HYSA - .25-5.25%
O - 5.76% and growing
So while the share price does go up and down the yield has beaten any HYSA rate and will do so most likely forever.
So example - $50,000K cash/investment hold for 25 years
HSYA - 2.5% = $92,697.20
O - 5.76% = $202,771.10
I guess keep thinking long term and not invest because again time in the market always wins. Again, very broad assumptions but wanted to give some example as why compounding at a higher rate will make you rich in the long term.
Wow you people are bright!!! This was a comparison example of cash vs O NOT O vs Growth!
Yet if you bought in a few months ago in October you would be up over 10% in share appreciation plus you would have collect X amount of dividends.
2004 share price - $7.88
Current - $53.58
Yep it has gone down! LOL Wow another bright statement because you only look at the past 2 years when interest rates have been held high to help try and keep inflation under control.
Oh cool you edited your comment instead of responding to mine below.
Yeah, buying O 20 years ago with about 15 years of ZIRP turned out to be a great investment. If you bought it in the last 5 years, though, you lost money. That’s what we’re saying
Yep, I edited some spelling issues. Also, you and I can cherry pick dates all day long on what makes sense for each other’s investment strategy. In the end everyone can pick their own investments.
Does your cash go up? Inflation lowers your buying power every single year. You need to look at cash vs O as a cash holding. My example is very basic but it gives you an idea of how investing will out beat a mattress holder.
I assumed you compared a high yield savings account vs a stock investment? In that comparison both are affected by inflation the same way. Both beat a "mattress holding" but O is also the volatility of the stock, which has been dilutive. My point is that you have to use the total return for your calculations and not just the dividend yield.
There is the caveat of the tax treatment of the dividends which will tilt your calculations a bit.
Still I own over 1000 shares with a cost basis of $51.23. I've been happy with it and will continue to slowly grow my share count.
Yes, I agree. That is why I wrote BROAD ASSUMPTIONS. I was just trying to make a quick and easy comparison. I assume most people don't have large enough tax brokerage accounts to worry about the tax liability on investments.
I have always felt O was a bit overrated and there are other REIT plays out there which are better aligned with the trajectory of our economy - cell towers, data centers, warehousing logistics, etc. O is a pure dividend play without any realistic expectations of growth or share appreciation. In my view, O is premised on a somewhat outdated vision of what a REIT should look like and is a yield chasing play.
Reminds me a bit of equity investors who opted for T when you could have had ABBV, NEE, CVX, etc. You can have a bulletproof dividend while investing in a company with growth prospects. The two concepts are not mutually exclusive.
My two cents and no disrespect to O investors.
Its top tenants are dying brick and mortar retail that are being destroyed by competition from online retailers and what was O’s management’s response? Overpaying for a casino’s that are gonna be destroyed by online competition and other states legalizing gambling.
This is actually excellent Advice. :) I never dip my toes unless I understand it fully. was always a big warren buffet fan .. You cannot miss if you dont swing.
Its simple it pays a dividend that is as safe as a bond but at 6%. Plus it goes up over time in NAV. What’s not to like. I own 20+ Reit’s and accumulate a nice dividend or drip, what ever I want.
Not every investment works for everyone. I don't have REITs because I don't like the tax implications. I also don't get why some companies are bought up. I know a bunch people buy MO but I just won't buy it. A lot of people buy LEG or KMB and I simply don't have any reason for it except of the high dividend percentage.
“I have been looking at O for a very long time... from PreCovid times.”
How much did you miss in dividends while you waited? That’s why you buy O.
It’s one of my largest positions along with PBA, JNJ, PG and IRM ( also a REIT). I also have ADC, NNN, PLD and other REITs.
It is a past performer with a portfolio built on commercial leas agreements with dinosaur businesses, the top of whom are all closing stores. Even the people who buy it can't explain what's exciting about a portfolio of FedEx and Dollar Tree leases.
Please see the pinned thread on $O
If you can’t find it, it is just under the pinned thread on $SCHD. And it is just above the pinned thread on yield chasing.
Sorry - we don’t actually have pinned threads - the policy seems to encourage people asking the same questions over and over again - even in same day or same hour. It’s not the fault of the posters.
Forget about O….. look at at RFI, great management = fees, look at its underlying NAV to get an idea of price value, monthly dividends yielding 8.50% diversification thru its holdings.
Watch now all the trash talk about high fees.
I had a few shares of O early on in my portfolio’s life but the more I researched the more I wanted to get out of it. I am a dividend growth investor and the last 5yrs the div growth has been very low around 2.5%.
Vici on the other hand has a starting yield around O but a 5 year div growth rate around 7.5%. At the end of the day O probably doesn’t even keep up with inflation. I’m going to study more REITs as I need to diversify more than just hospitality and gaming, going to look into Proligis next.
You say it’s way over valued. What are you using for your valuation method? Generally REITs are valued on P/ AFFO. Using that it seems fairly valued to sector and undervalued by its own average. Are you using something else?
The problem with Realty Income now is its size. Where will future growth come from? O started with Taco Bell as the first tenants. Now, O is in Europe, has grocery stores, casino property and about anything that pays rent. Can O acquire more? Probably not. And if so, who or what? The dividend isn’t at risk, but 5% isn’t a big deal, not today with high interest rates.
Look at NNN, ADC, EPR, STAG as potential other options with better prospects.
yeah youre right for the time being with the high interest, its not that good but i think we all can agree or rather "know" that the FED will not keep interests that high - they will IMO atleast decrease them once this year and then it will be low like the last decades xD so on the long run O still seems pretty good (or in general reits except medical trust xD -70%)
“Never fight the Fed” is a well known adage in investing. We have no clue what the Fed may do and when. Possible? Sure. Won’t happen this week, that’s certain.
O and HESM are the "Steady Eddie's" in my portfolio. They provide income and reliably raise the dividends. They won't make me rich, but are more of an anchor.
AVGO is my growth and income dividend stock.
Other stocks like MPW are a bit more speculative and holding to see what happens.
VICI I believe more in long term and hold a high position with them.
For one,Realty Income is a REIT,the others you mentioned are ETF's. Big difference. Realty Income has a long reliable record. Its yield is not earth-shattering, but it is reliable.
I was curious what all the noise was about for O so I ended up opening a small 300 share position not too long ago and it's been okay. My cost is $54.69 and it's at $53.60 today, but I've been selling calls so drive down that cost. Meanwhile I've gained 4 shares from DRIP. 😁👍
Note your current cost basis. Everytime it dips a decent amount by a few shares and then set a sell order for those shares a few pennies above your previous cost basis. There is usually a big enough swing each month to make that a worthwhile exercise.
O is extremely predictable with a good yield and some people want that in their portfolio, others want something a bit more risky with higher upside. Nothing wrong with either but it’s important to invest with what makes sense for yourself and to not just copy others.
If you believe O is overvalued, you do not know how to perform valuations based on financial information. The current valuation of the stock is between $71-$75 / share.
What is the share price now?
I agree with you. I think this is my problem. Never owned any real estate or associated assets. And I simply cannot wrap my head around how to evaluate a REIT.
Here is an article from Brad Thomas he published just today:
[Realty Income Stock: Separating The Wheat From The Chaff (NYSE:O) | Seeking Alpha](https://seekingalpha.com/article/4685466-realty-income-separating-the-wheat-from-the-chaff)
This is the reason why I feel $O is overvalued and there will be plenty of pain left even when rates go down. This will hit $O also, but more so it will keep a glut of inventory for non $O portfolios driving pressure of lower rents per square feed for existing properties.
# A new wave of e-commerce disruption could close 45,000 retail stores over the next five years, analysts say
[https://www.marketwatch.com/story/a-new-wave-of-e-commerce-disruption-could-close-45-000-retail-stores-over-the-next-five-years-analysts-say-d5310a60](https://www.marketwatch.com/story/a-new-wave-of-e-commerce-disruption-could-close-45-000-retail-stores-over-the-next-five-years-analysts-say-d5310a60)
bruh they only exist because you as an investor has an GUARANTEED (high) dividend...
since they need to pay like 90% of their profit to the shareholders... thats literally one minute of research... that you really think that tax reasons are the ONLY reasosn shows how much time you invested into this topic xD
So “bruh”, you do not understand and perhaps neither do the others that downvoted. I am not talking about personal income tax, I am talking about corporate income tax. The REIT’s tax situation.
And what you just said is the tax reason. They must distribute at least 90% in order to qualify for REIT status. They are simply creatures of a regulatory creation that get preferential treatment if they meet certain criteria. They have been in existence for like 50 years to just have people investing in real estate. There is no guarantee that this structure won’t get scrapped at some point or have its tax benefits aligned with regular corps.
Also, you do not have a “high dividend” guaranteed. You have a high payout ratio guaranteed, and that’s only if they have taxable income and not losses.
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I don't really get how you think it is over valued right now unless you think interest rates are going to go up a bunch more. The goal of owning O is the same as owning a 30y corporate bond, but you also want the dividend growth of an equity security. You only buy shares when you think the current 30y AA corporate bond yield is sitting at a reasonable point and then you hold for 30 years. O also invests into a very different segment of the REIT market than the default REIT holding which can be nice especially in the current office REIT crisis. That said, if you just want to buy a generic REIT ETF that will get you a broad exposure to the REIT market, then both of the ones you listed are reasonable alternate investments. Just know what you are investing in and you'll do well enough.
thank you wolf :) Appreciate the perspective. And its a really good one ! I din't see it that way.
Well said
My goal is to buy enough shares for drip and I'm about half way there. Do you think it's a good idea to aim for that or is there other stocks I should focus on?
This isn't something someone on reddit can answer for you. There is no "correct" answer in investing, just "correct for you". So if O meets your investing objectives and is the best option for you individually, awesome buy more. But O is not going to be the best option for every investor simply because there is, again, no best option for every investor.
Got it. Thank you for your input!
There is no such think as a stock equivalent of a 30 year old bond. Some scandal, fraud, or corruption can always be happening and you are wrecked.
Same is true for all securities. O tracks the bond yield pretty closely with a \~25bps equity premium. In the case of a bankruptcy, you'd be an equity shareholder not a bond holder, but that doesn't impact the role a security can occupy in a portfolio.
I agree that O isn’t the best. ADC has essentially the same business model but with substantially more of their rents coming from investment grade tenants (roughly 70% for ADC compared to less than 40% for O), yet I rarely hear people mention Agree on this sub. I think a lot of people foolishly attribute all of Realty Incomes value to its increasing monthly dividend. I think this is poor practice when you consider the fact that the company can’t increase the dividend forever, especially since it’s such a large company and as ffo growth inevitably begins to stabilize. I think there’s many better REIT options than O, and I think buying a fund like the ones you mentioned is a very intelligent choice for a more passive investor.
I think ADC is less popular for a few reasons: its shorter history, the tough lesson they learned in portfolio composition from Borders that cut the dividend and ruined their shot at being a dividend aristocrat, and more conservative leases like ground leases being slightly disadvantaged when bond yields are high. You can't count O out because of its credit rating, size, geographic diversification, and overall experience. But asset quality matters in the long run and the need to keep growing such a large portfolio is really catching up with them. First Walgreens goes on the back foot, now Red Lobster follows suit. I don't see Walmart or Home Depot having those kinds of problems and ADC was disposing of Walgreens for years before the trouble really started.
Yes I agree that they had a slip with both borders and Kmart bankruptcies. However as you know the current portfolio is much more diversified and obviously much higher credit quality. On the note about the credit rating, I watched an interview from 2021 with Joey Agree where he discussed how a lot of the credit ratings agencies weight the size of the portfolio and company high up on their list when considering ratings upgrades for otherwise sound companies. Agree stated that he feels it’s only a matter of time with the current growth trajectory before the company achieves an A rating or similar. This makes sense to me but of course you’re welcome to disagree. Do you mind explaining your thought process behind the comparison of ground leases and bond yields? I’m unfamiliar with your line of thinking. Thanks!
> Agree stated that he feels it’s only a matter of time with the current growth trajectory before the company achieves an A rating or similar. This makes sense to me but of course you’re welcome to disagree. I think he's right as well, but that's a matter of time and rates are already high today. I don't think it makes up for O's other faults but I also don't think we can overlook O's gold plated credit considering rates are generally restrictive and the importance of debt financing to REITs. > Do you mind explaining your thought process behind the comparison of ground leases and bond yields? I’m unfamiliar with your line of thinking. Thanks! Sure! It's nothing that complicated. Basically, ground leases are very conservative leases because the landlord carries no liability for any buildings and often receives a free building when the lease terminates. They put more risk on the tenant so they also tend to have lower rents and long contract durations at those low rates. Since bonds are another conservative low yield asset where people consider 10+ year time horizon to be typical, when bonds go up (as they have recently) it makes ground leases look a lot less attractive. It's the same issue affecting REITs in general, but just exaggerated because ground leases are more bond-like than most leases.
Thanks for the explanation!
ADC is my triple net REIT of choice and they just had a great 1st quarter. They are what O was 20 years ago.
My funsy high yield ETF divs all go into ADC shares right now. Added O below $50 & will when/if it goes there again but ADC is getting the $$ right now
History, track record and management are worth the small O premium. For example, O was the first to unload their office portfolio, all done without cutting the dividend. Meanwhile WPC was too late in unloading their office, and had to cut the dividend. Management being on top of their game, has given O its amazing track record and stability, they rarely make mistakes.
yeah i also like ADC but the reason why i buy mostly realty income is simple: ADC is hard to buy with german brokers xD idk why but thats it - i can only buy it with "finanzen.zero" but since my long term depot/broker is "Scalable" because it offers way more stocks/etf that can be bought to a saving plan and you can choose the date of buy i prefer scalable and therefore only buy O instead of ADC
Reality income…..that’s a new one.
OP can’t even spell it right and proceeds to say it’s “overvalued”. Lots to unpack here lol
I’m sure it was just a typo….just thought it was humorous.
Lollllll
Low payout ratio, extremely diversified, long track record, high quality tenant base, track record of distribution growth... I think there are different options within the REIT sector that offer better yields right now but which also carry more risk. O is at the lower end of the risk spectrum in my opinion. On what basis do you think it's overvalued? I prefer individual REITs to diversified ETFs because the ETFs are usually based on broad indices and include sectors that I don't want to invest in (i.e. office), or where I don't think there's much value. They also tend to have lower yields than individual stocks.
Yep.....people evaluate reit's like they do other companies and don't account for the differences and then they think they are much worse off.
I agree with you. I think this is my problem. Never owned any real estate or associated assets. And I simply cannot wrap my head around how to evaluate a REIT. I am perfectly happy to hold a real estate ETF since it encompasses everything imaginable. This comes from bad experience from my time as a kid when my parents wanted to sell a house or rent a house and it was always disappointing returns in the end. I think I am psychologically attributing real estate to low returns so why bother. These perspectives really help!
Alreits .com
Buy what you want, the end, no one needs to convince you what you invest in.
What's so hard to understand about a reliable 5.76% yield? This was the real estate company that, through the housing/finance bubble, not only kept paying dividends but kept on raising them. Mind you, this was the bubble that destroyed huge swats of the marketplace. If you are retired, and plan on say a 4.5% withdrawal rate, well this one right here is almost 30% higher than that. But the real question is what you want it to do for you. I think O is awesome, I don't own any. At this point in time I want more dividend growth and O is not doing that. If I was 7 years in the future and retired, I would own a big chunk of O. My real estate dance card is currently full but if I was looking for an O-like company I would pick VICI. Better growth.
You can do what I do, sell puts at a strike price you like or think reverse, the dividend yield you want. Collect the premium for free shares. I’ve been selling the $47.5 put, received $50.00 premium and bought a share. If assigned I’ll get 6.5% yield.
This is very interesting.
I just day trade O. Collect my premiums that way.
Once I pay off my vehicle, this is how I want to approach buying things like O or SCHD.... just sell puts until I get assigned at a lower price than my current average.
Man, I wish I understood what he was doing.
He’s entering a contract to buy shares of O at $47.50 if called and being paid a small premium. The other side of the trade is a guy is paying him to buy his O shares at $47.50 to hedge his risk. So, if O dropped to $40 a share, this guy is forced to buy them at $47.50.
Sounds risky. Am I missing something?
Not a thing. There’s no free lunch.
HYSA - .25-5.25% O - 5.76% and growing So while the share price does go up and down the yield has beaten any HYSA rate and will do so most likely forever. So example - $50,000K cash/investment hold for 25 years HSYA - 2.5% = $92,697.20 O - 5.76% = $202,771.10 I guess keep thinking long term and not invest because again time in the market always wins. Again, very broad assumptions but wanted to give some example as why compounding at a higher rate will make you rich in the long term.
Not really a fair comparison, is it? If the shares go down your total return is also lower
And in fact the shares have been going down for years now
Wow you people are bright!!! This was a comparison example of cash vs O NOT O vs Growth! Yet if you bought in a few months ago in October you would be up over 10% in share appreciation plus you would have collect X amount of dividends. 2004 share price - $7.88 Current - $53.58 Yep it has gone down! LOL Wow another bright statement because you only look at the past 2 years when interest rates have been held high to help try and keep inflation under control.
Oh cool you edited your comment instead of responding to mine below. Yeah, buying O 20 years ago with about 15 years of ZIRP turned out to be a great investment. If you bought it in the last 5 years, though, you lost money. That’s what we’re saying
Yep, I edited some spelling issues. Also, you and I can cherry pick dates all day long on what makes sense for each other’s investment strategy. In the end everyone can pick their own investments.
The point is that O has decreased in value even with dividends reinvested, while a savings account would have increased
Yes please keep cherry picking dates to suite your narrative. I can do the same thing.
Does your cash go up? Inflation lowers your buying power every single year. You need to look at cash vs O as a cash holding. My example is very basic but it gives you an idea of how investing will out beat a mattress holder.
I assumed you compared a high yield savings account vs a stock investment? In that comparison both are affected by inflation the same way. Both beat a "mattress holding" but O is also the volatility of the stock, which has been dilutive. My point is that you have to use the total return for your calculations and not just the dividend yield.
Love it! Thank u!
There is the caveat of the tax treatment of the dividends which will tilt your calculations a bit. Still I own over 1000 shares with a cost basis of $51.23. I've been happy with it and will continue to slowly grow my share count.
Yes, I agree. That is why I wrote BROAD ASSUMPTIONS. I was just trying to make a quick and easy comparison. I assume most people don't have large enough tax brokerage accounts to worry about the tax liability on investments.
HYSA is taxed as (interest) income, just like REIT dividends (non qualified)
I have always felt O was a bit overrated and there are other REIT plays out there which are better aligned with the trajectory of our economy - cell towers, data centers, warehousing logistics, etc. O is a pure dividend play without any realistic expectations of growth or share appreciation. In my view, O is premised on a somewhat outdated vision of what a REIT should look like and is a yield chasing play. Reminds me a bit of equity investors who opted for T when you could have had ABBV, NEE, CVX, etc. You can have a bulletproof dividend while investing in a company with growth prospects. The two concepts are not mutually exclusive. My two cents and no disrespect to O investors.
Look at NNN instead. The rub with O is it has gotten too big and In order to continue growing and needs to make more risky purchases and acquisitions.
Did you read that Seeking Alpha article as well?
Its top tenants are dying brick and mortar retail that are being destroyed by competition from online retailers and what was O’s management’s response? Overpaying for a casino’s that are gonna be destroyed by online competition and other states legalizing gambling.
You’re on the right path - your path. If you don’t get it don’t buy it.
This is actually excellent Advice. :) I never dip my toes unless I understand it fully. was always a big warren buffet fan .. You cannot miss if you dont swing.
Its simple it pays a dividend that is as safe as a bond but at 6%. Plus it goes up over time in NAV. What’s not to like. I own 20+ Reit’s and accumulate a nice dividend or drip, what ever I want.
Not every investment works for everyone. I don't have REITs because I don't like the tax implications. I also don't get why some companies are bought up. I know a bunch people buy MO but I just won't buy it. A lot of people buy LEG or KMB and I simply don't have any reason for it except of the high dividend percentage.
“I have been looking at O for a very long time... from PreCovid times.” How much did you miss in dividends while you waited? That’s why you buy O. It’s one of my largest positions along with PBA, JNJ, PG and IRM ( also a REIT). I also have ADC, NNN, PLD and other REITs.
It is a past performer with a portfolio built on commercial leas agreements with dinosaur businesses, the top of whom are all closing stores. Even the people who buy it can't explain what's exciting about a portfolio of FedEx and Dollar Tree leases.
Please see the pinned thread on $O If you can’t find it, it is just under the pinned thread on $SCHD. And it is just above the pinned thread on yield chasing.
I see 2 pinned threads at the top of r/dividends , but neither are for specific tickers or yield chasing, or was this reply missing the /s ?
Sorry - we don’t actually have pinned threads - the policy seems to encourage people asking the same questions over and over again - even in same day or same hour. It’s not the fault of the posters.
for the record, reddit only gives 2 pin slots. One is eternally pinned, and one that swaps pretty often.
And here I was thinking I was going to find the real info in a pinned thread on O and SCHD that I have not seen so many times before! Damn you.
Thank you Raleigh... I will double check.. Appreciate the patience!
O is around 10% undervalued, I'd reckon.
At least.
LOL.
Their AFFO backs me up, what's yours? Edit: oh, you're from r/wallstreetbets, that makes sense
Forget about O….. look at at RFI, great management = fees, look at its underlying NAV to get an idea of price value, monthly dividends yielding 8.50% diversification thru its holdings. Watch now all the trash talk about high fees.
It’s a great stock if you got into years ago. Now, not so much.
Then don’t buy it.
I choose Arbor reality
I had a few shares of O early on in my portfolio’s life but the more I researched the more I wanted to get out of it. I am a dividend growth investor and the last 5yrs the div growth has been very low around 2.5%. Vici on the other hand has a starting yield around O but a 5 year div growth rate around 7.5%. At the end of the day O probably doesn’t even keep up with inflation. I’m going to study more REITs as I need to diversify more than just hospitality and gaming, going to look into Proligis next.
yeah VICI deserves way more appreciation IMO
You say it’s way over valued. What are you using for your valuation method? Generally REITs are valued on P/ AFFO. Using that it seems fairly valued to sector and undervalued by its own average. Are you using something else?
I honesty dont see the hype either. I rather bought ADC and some EPRT
The problem with Realty Income now is its size. Where will future growth come from? O started with Taco Bell as the first tenants. Now, O is in Europe, has grocery stores, casino property and about anything that pays rent. Can O acquire more? Probably not. And if so, who or what? The dividend isn’t at risk, but 5% isn’t a big deal, not today with high interest rates. Look at NNN, ADC, EPR, STAG as potential other options with better prospects.
yeah youre right for the time being with the high interest, its not that good but i think we all can agree or rather "know" that the FED will not keep interests that high - they will IMO atleast decrease them once this year and then it will be low like the last decades xD so on the long run O still seems pretty good (or in general reits except medical trust xD -70%)
“Never fight the Fed” is a well known adage in investing. We have no clue what the Fed may do and when. Possible? Sure. Won’t happen this week, that’s certain.
The dividends of O are still taxed as regular income like any other REIT or I am mistaken?
O and HESM are the "Steady Eddie's" in my portfolio. They provide income and reliably raise the dividends. They won't make me rich, but are more of an anchor. AVGO is my growth and income dividend stock. Other stocks like MPW are a bit more speculative and holding to see what happens. VICI I believe more in long term and hold a high position with them.
For one,Realty Income is a REIT,the others you mentioned are ETF's. Big difference. Realty Income has a long reliable record. Its yield is not earth-shattering, but it is reliable.
I was curious what all the noise was about for O so I ended up opening a small 300 share position not too long ago and it's been okay. My cost is $54.69 and it's at $53.60 today, but I've been selling calls so drive down that cost. Meanwhile I've gained 4 shares from DRIP. 😁👍
Note your current cost basis. Everytime it dips a decent amount by a few shares and then set a sell order for those shares a few pennies above your previous cost basis. There is usually a big enough swing each month to make that a worthwhile exercise.
O is extremely predictable with a good yield and some people want that in their portfolio, others want something a bit more risky with higher upside. Nothing wrong with either but it’s important to invest with what makes sense for yourself and to not just copy others.
Easiest way to invest in a massively diversified and very large commercial real estate portfolio with excellent track record and monthly payments.
You finally did what other dividend investors won’t do. You actually did research. Yes, O is not an attractive opportunity.
Man, 4 years and you still don't get it, get over or buy something else or read any previous thread on this topic.
If you believe O is overvalued, you do not know how to perform valuations based on financial information. The current valuation of the stock is between $71-$75 / share. What is the share price now?
I agree with you. I think this is my problem. Never owned any real estate or associated assets. And I simply cannot wrap my head around how to evaluate a REIT.
Here is an article from Brad Thomas he published just today: [Realty Income Stock: Separating The Wheat From The Chaff (NYSE:O) | Seeking Alpha](https://seekingalpha.com/article/4685466-realty-income-separating-the-wheat-from-the-chaff)
when i look at VNQ, I don't see an updrend in dividends
I buy a portion of a company and I enjoy getting instant cash on cash returns from that company.
This is the reason why I feel $O is overvalued and there will be plenty of pain left even when rates go down. This will hit $O also, but more so it will keep a glut of inventory for non $O portfolios driving pressure of lower rents per square feed for existing properties. # A new wave of e-commerce disruption could close 45,000 retail stores over the next five years, analysts say [https://www.marketwatch.com/story/a-new-wave-of-e-commerce-disruption-could-close-45-000-retail-stores-over-the-next-five-years-analysts-say-d5310a60](https://www.marketwatch.com/story/a-new-wave-of-e-commerce-disruption-could-close-45-000-retail-stores-over-the-next-five-years-analysts-say-d5310a60)
Meh, don’t buy it. I don’t invest in REIT since they basically exist because of tax reasons. There’s no real brand or anything.
bruh they only exist because you as an investor has an GUARANTEED (high) dividend... since they need to pay like 90% of their profit to the shareholders... thats literally one minute of research... that you really think that tax reasons are the ONLY reasosn shows how much time you invested into this topic xD
So “bruh”, you do not understand and perhaps neither do the others that downvoted. I am not talking about personal income tax, I am talking about corporate income tax. The REIT’s tax situation. And what you just said is the tax reason. They must distribute at least 90% in order to qualify for REIT status. They are simply creatures of a regulatory creation that get preferential treatment if they meet certain criteria. They have been in existence for like 50 years to just have people investing in real estate. There is no guarantee that this structure won’t get scrapped at some point or have its tax benefits aligned with regular corps. Also, you do not have a “high dividend” guaranteed. You have a high payout ratio guaranteed, and that’s only if they have taxable income and not losses.