Moving away from consumer brands, I want to highlight my favorite long-term REIT holding, Realty Income (O), a conservative triple-net REIT that owns things like pharmacies, gyms and distribution centers. Realty Income is very selective in both the properties it chooses and the tenants responsible for paying the rent.
Realty income has a 44-year track record as a landlord. It owns 3,800 commercial properties in 49 states and Puerto Rico, all of which are leased under long-term leases typically of 10 to 20 years. To spread the risk, Realty Income’s tenants are spread across 200 companies and 47 industries.
Realty Income has been a dividend-paying and dividend-raising monster since going public in 1994. In 19 years, it’s made 519 dividend payments and hiked the dividend 73 times. Importantly, unlike many of its brethren in the REIT space, Realty Income sailed through the 2008-09 meltdown without a scratch. Not only did it maintain its dividend throughout, Realty Income actually raised it.
I have no idea what the world will look like 30 years from now. But I have no doubt in my mind that the three rules of real estate will be the same then as today: location, location, location.
Realty Income has taken a beating of late, as have most income-oriented investments. Fears of rising bond yields and Fed tapering have scared away would-be investors.
Use this as an opportunity. Buy Realty Income, enjoy its 5.6% dividend, and … well, keep on enjoying.