"Right now, I believe real estate investment trusts (REITs) are one of the worst places you can put your money; but there is one exception," says Tom Dyson.
In Daily Wealth, he looks to Realty Income (NYSE: O), explaining, "This REIT -- which has paid 463 consecutive quarterly dividends -- is one of my all-time favorite income investments." Here's his review.
"I see abandoned real estate all over my town. Half the businesses still operating are running on fumes. Our Kmart is a basket case. It's always empty. The Walgreen's is a teardown. Sears has gone. The carpet store has gone and they've boarded up the car dealership.
"On the other hand, guess what businesses are working best near my house? The gas station, the dry cleaners, the post office, and the Mexican restaurant. These businesses haven't seen any dent in custom, as far as I can tell.
"And Realty Income only does business with companies that provide basic services. You'd never find a jeweler or an auto dealership leasing property from Realty Income, for example.
"Realty Income's business model is simple. It buys convenience stores, gas stations, tire changers, chain restaurants, theaters, and daycare centers. Then, it leases the properties back to the owners in long-term leases with inflation bumps priced into the rent payments.
"This business model and its expertise in real estate investing translates into an incredibly stable dividend that rises slowly over time. It's safe, too. It has a 30% debt-to-equity ratio, no mortgages, and it doesn't have to pay back any debt until March 2013 ... plenty of time.
"Realty Income's goal is to produce dividends for its owners. Every decision it makes is designed to bolster the dividend. Producing dividends is the reason management gets out of bed in the morning.
"It was founded in 1969. It has paid a monthly dividend every year since its incorporation. Realty Income became a public company in 1994.
"It has paid 463 consecutive monthly dividends and raised its dividend every quarter. That's 46 consecutive quarterly dividend increases.Right now, Realty Income pays an 8% dividend.
"The last 12 months were the worst year in REIT history; the iShares Dow Jones US Real Estate Index fell 50%. Yet Realty Income's stock is exactly where it was last year. That shows incredible strength.
"In sum, Realty Income is a rock-solid real estate company. I recommend you check out its annual report. Management writes it for the benefit of the small shareholders like you and me. It's easy to understand and fun to read.
"If you like what you see, you should consider buying the stock and collecting the 8% dividend. This is one dividend that will rise for the rest of your life."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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