Looking Ahead: A Resilient Investment for the New Year
As the year comes to a close, investors are naturally thinking about the best stocks to buy for the coming year. Identifying stocks that will perform well over the long term is crucial, but considering the current market conditions is also essential. One key factor to consider is a stock’s resilience in different economic conditions.
A Company Built to Weather the Storm
Realty Income (NYSE: O) is a company that has positioned itself well for any potential macroeconomic outcome. With a monthly dividend payment, Realty Income has raised its dividend every year for the last 30 years, earning it the nickname “The Monthly Dividend Company.” As a real estate investment trust (REIT), the company is required to pay at least 90% of its earnings out as a dividend, making the dividend payment highly reliable.
A Diversified Portfolio
Realty Income’s business model involves owning real estate and leasing it out to clients across 90 separate industries. Most of these lease agreements are triple-net leases, which means the clients are responsible for taxes, insurance, and maintenance. This diversification provides a buffer against economic downturns, as no single sector can have an outsized impact on the REIT’s portfolio. In fact, 90% of Realty Income’s real estate portfolio is classified as “resilient to economic downturns and/or isolated from economic pressures.”
A Strong Track Record
Despite the stock’s recent performance, Realty Income has delivered impressive results. Over the last five years, revenue has grown by 237%, and funds from operations (FFO) have increased by 210%. The company has also posted a compound annual total return of 14.1% since its debut on the public markets in 1994.
A Buying Opportunity
The prolonged slump in the REIT sector has presented a compelling buying opportunity, especially for strong companies like Realty Income. With a dividend yield of 5.9%, easily outpacing the S&P 500’s yield of 1.3%, Realty Income is an attractive option for patient investors.
Before You Buy
While Realty Income is a strong contender, it’s essential to consider other options as well. The Motley Fool Stock Advisor analyst team has identified 10 stocks that could produce monster returns in the coming years. These stocks have the potential to deliver exceptional growth, making them worth considering for your portfolio.
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