Realty Income: Taking My Bullishness To A Whole ‘Nother Level (NYSE:O)

Will Realty Income (O) become the next AT&T (T)?

The world’s most boring battleground stock.

Given the attention Seeking Alpha contributors and subscribers pay attention to the stock, it’s almost there.

As I write this, Seeking Alpha has published 11 articles with T as the focus ticker for August. O comes in at seven. I’m sure between the time I’m crafting narrative gold and publication, there will be at least several more. And I’m all for it.

It’s high time more relatively boring stocks see the spotlight. A new investor who stumbles on Seeking Alpha will end up better off buying Realty Income or AT&T stock than she will loading up on a penny stock that promises to turn psychedelics into a Coronavirus treatment.

I’m O So Bullish

I’m beyond bullish Realty Income’s stock.

Several Seeking Alpha authors have made sound cases in response to recent bearishness.

Brad Thomas set straight the stock’s recent growth pattern. The baddest man of them all, Regarded Solutions, detailed the strength of O’s dividend. And FIG Ideas delivered on all of the above alongside a solid company analysis.

I recently articulated the power of buying, holding, and reinvesting dividends into stocks such as O and T. There’s no better way to structure a portfolio than to load it with income stalwarts that are in sound spaces alongside growth or the potential for growth. If they’re well operated from a financial perspective, as Realty Income and AT&T are, all the better.

There’s nothing better than knowing that management can effectively mind and maintain the dividend during times of widespread tumult or a period of stagnation at the company. These are the core reasons why we’re so passionate about Realty Income and AT&T.

In Realty Income’s case, its portfolio says it all. And its portfolio can inform your portfolio. In fact, you would be smart to consider using Realty Income’s portfolio to construct part of your own. Like almost to a tee.

Source: Realty Income

The only Realty Income clients that have had difficulty paying the rent ride in the following spaces – the movie theater, fitness, and child care businesses. You can see for yourself in the company’s most recent investor presentation at the source link.

Outside of that, Realty Income’s clients make up the who’s who of pandemic-resilient stocks. In the present environment especially, I’m borderline dumbfounded how anyone could not want to own this stock. Outside of the aforementioned sectors, O’s clients represent the go-to establishments no matter what we’re going through – good times and bad.

In fact, you’d be perfectly sane and logical if you constructed an actual portfolio of stocks simply by copying Realty Income’s premier client stable.

Stock Recent Price YTD return Div Yield

Annual Income

Walgreens (WBA) $39.48 (32.7%) 4.71% $187

Dollar General (DG)

$199.02 26.8% 0.73% $144
FedEx (FDX) $210.58 38.1% 1.25% $260
Walmart (WMT) $131.57 9.9% 1.65% $216
CVS Health (CVS) $63.92 (14.2%) 3.14% $200
Kroger (KR) $35.92 24.0% 2.00% $72
Home Depot (HD) $283.27 28.5% 2.14% $600

I didn’t include stocks that don’t pay dividends, trade on a foreign exchange of the pink sheets only, or rest in one of the distressed industries. I figured the annual income on 100 shares based on the company’s current yearly dividend payout.

That’s not too shabby. I wouldn’t hesitate to buy any of those seven stocks. You can make a sound case for any of them, even the CVS Health and Walgreens, which have underperformed.

The portfolio generates roughly $1,679 in annual income, assuming 100-share positions in each stock. Not the highest yielding portfolio in the world, but strong companies, some of which have consistently raised dividends or could be headed in that direction.

The beauty of a stock such as Realty Income is that it’s easy to make a logical assessment of its strength, particularly as a company that needs to collect rent during a pandemic. It’s seeing strong collection figures (outside of theaters, gyms, and child care) and isn’t exposed to some of the weakest sectors of the broad real estate market. For example, it isn’t tied to the strength of shopping or strip malls. You’re not going to need Amazon.com (AMZN) to come in and bail it out.

There’s another excellent illustration from the company to drive the larger point home. These are names you want to be in.

For goodness sake, if you like to trade or speculate, AMC Entertainment (AMC) could have made you decent money through its recent volatility. Going forward, it might even be a turnaround play, though I don’t recommend it.

Bottom line – soon the worst might be behind Realty Income clients the pandemic hit hardest. That might not be reason enough to buy one of their stocks, but it does add to the relative comfort and excitement I have buying and holding O.

I might not buy every one of the stocks that could comprise a Realty Income retirement portfolio, but I’ll probably consider adding them.

That aside, viewing it from this perspective makes even more confident to continue to add to my position in O, right alongside buys of T.

I’ll take both stocks into overtime.

Disclosure: I am/we are long O, T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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