The end of the year is a time for reflection and an opportunity to look to the future. It’s only natural that investors are already thinking about the best stocks to buy for next year. Ideally, investors should try to identify stocks that will be profitable investments over the long term.
but when Buying a stock can impact returns, so thinking about the present also makes sense. One factor that some investors may consider is how flexible the investment is in the face of different economic conditions. Finding a stock that can weather the storm of a recession may be attractive to those who worry about the potential for a downturn next year.
Let’s take a look at a company that has positioned itself well for any potential macroeconomic outcome and see if this is a good time to buy.
Real estate income (NYSE:O) It pays its dividends every month. Although this is not unique, it is something the company takes very seriously. It has raised its dividend every year for the past 30 years. Paying these ever-increasing dividends is important enough that Realty Income calls itself the “Monthly Dividend Company.”
Regardless of a company’s priorities regarding its dividend, Realty Income also has to pay out at least 90% of its profits as dividends because it is a so-called real estate investment trust (REIT). This rating enhances the reliability of dividend distribution to shareholders. The stock currently has a dividend yield of 5.9%, which easily exceeds Standard & Poor’s 500Yield 1.3%
Realty Income is engaged in owning and leasing real estate to clients doing business in 90 separate industries. Most of these lease agreements are triple-net leases, which means that the clients — not Realty Income — are the ones responsible for things like taxes, insurance and maintenance.
Realty Income’s strategy of leasing to several distinct industries provides diversification to its real estate portfolio. If one sector of the economy experiences a recession, it will not have a significant impact on the REIT because that sector will only represent a small percentage of its portfolio.
The company allocates 73% of its portfolio to businesses such as non-discretionary, low-priced and service-oriented retailers. Think grocery stores, convenience stores, drug stores, etc. In short, even when things get tough economically, Realty Income clients must be resilient. In fact, the company classifies about 90% of its real estate portfolio as “resilient to economic downturns and/or insulated from economic pressures.”
Comments are closed, but trackbacks and pingbacks are open.