A new month, a new purchase.
REITs have been on the decline for months, but I wasn’t really looking to add to my REIT holdings unless the price was right. With the recent market declines in this first week of February, one REIT I hold dipped low enough for me to want to add more shares. Like my previous stock purchase in January, this one wasn’t large, but it brings more dividend income into the Portfolio, and monthly dividend income at that.
Today, I added to my existing position in Realty Income. (O). O is known as The Monthly Dividend Company. Many dividend growth investors are familiar with O, so I won’t go into all the details here. Just know that O is a commercial retail REIT that generates rental income from its 5,000+ freestanding commercial properties thanks to long-term net lease agreements it has negotiated with its tenants.
O has been the purchase target of many dividend growth investors in the past few weeks as the price has declined. In fact, O started the year at a shade over $57/share, and has dropped ~13% in 5 weeks. Shares of O haven’t traded this low since the end of 2015.
Here are my purchase details…
On 2/6/18, I purchased 32 shares at $49.639/sh, for a total of $1,588.45.
The yield on these additional shares is nearly 5.3%.
I now hold 115.014 shares of O. This purchase results in an additional $84.10 in annual forward dividend income, bringing my forward dividend total for O to $302.26. Thus, I’m now looking at $25/mo. in dividends from O.
O now sits side-by-side with Crown Castle International (CCI) as the largest REIT position in my Portfolio.
While O’s price may remain depressed in the near-term thanks to concerns about rising interest rates and their impact on REITs, long-term I think O can deliver 5% growth. Couple that with the nice 5% yield, and the total return looks terrific to me.
Any thoughts on my O purchase price? If you already bought O recently, are you looking at possibly adding more? Are there other REITs you like more at this time? Are you looking at additions in other sectors instead? Utilities perhaps? Please comment!