Stocks - BUY - Realty Income

There is one new position to report which I added to my portfolio in December. This was actually against my recommendation not to enter the market at current prices (see Market – Oct 2013). There was, however, one fundamental change in November which allowed me to act against my own recommendation: This was Draghi’s announcement to once again reduce the base rate (from 0.50% to 0.25%). This step represents another cut-back on my savings account and as a result I freed up more resources for additional dividend investments.

In the past weeks the stock price of Realty Income came down to a level of EUR 30 (USD 40) and was within an acceptable range. Hence, I entered at EUR 29. Timing could have been better as the price went even further down to EUR 26.60. But, as usual, you never get the cheapest entry point. 

Many experienced dividend investors are currently discussing the impact of Fed tapering and are more defensive towards investments in REITs. As a long-term investor I remain confident in Realty’s business model and its track record:

- Equity REIT (no mortgage REIT)

- Portfolio of 3,800 commercial properties across the US

- 74 consecutive dividend increases

- Market capitalization of USD 7.4bn (largest US commercial REIT)

- S&P BBB+ investment grade rating

- Equity ratio of 60%

There are many articles and lots of extensive stock analysis on seeking alpha and other websites so I refer to these sites for a detailed analysis.  

I hold no position in this stock or in the sector and deem a yield of 5.50% attractive enough as entry price. 43 stocks at EUR 29 are enough for now. Further additions are possible if considered suitable from a portfolio perspective.