One Stock Every Investor Should Own
Buy what you know
An old mutual fund manager, Peter Lynch, coined that phrase.
It’s straightforward wisdom that works — buy stock in companies whose products and services you use or are familiar with.
There’s no better evidence of the strategy’s success than the standout stocks of this pandemic-guided market.
Apple. Zoom. Amazon. Chewy. Spotify. Chegg.
All names we know.
What about a name we don’t think we know, but actually do?
It deserves a place in your portfolio.
If it literally pays you every month to be a shareholder, all the better.
Realty Income is a REIT. That stands for Real Estate Investment Trust.
A REIT owns property and leases it to tenants. REITs operate in all different sectors — health care, apartments, retail, you name it. Some REITs don’t own property directly. They finance real estate. We call them mortgage REITs.
Here’s the beauty of REITs for investors — they must return at least 90% of their taxable income to shareholders as dividends.
Most companies — REIT or not — pay their dividends quarterly. Realty Income distributes dividends monthly. It has even registered the associated moniker.
Dividends provide a psychological boost for investors. Nothing like that worthwhile and productive shot of dopamine 12 times a year, rather than 4.
Investors generally use dividend payments to pay living expenses or buy more shares of stock. If you’re building wealth via investing, commit to the latter.
There is something psychologically pleasing about seeing dividends roll in and get reinvested. Even if you’re starting small, you can see the potential for long-term success. The numbers don’t lie. They add up fast.
There’s a more important reason to own Realty Income. Not only has it paid 601 consecutive dividends, but Realty Income’s clients are names you know.
Outside of gyms and movie theaters (which should bounce back nicely), Realty Income does business in sectors of the economy built for the pandemic. Its holding speak for themselves — Home Depot, 7-Eleven, CVS, FedEx.
And, more importantly, it’s collecting rent from these companies:
You know Realty Income, even if you never heard of it. There’s a high probability you go inside buildings it leases multiple times a week or day.
The modern-day investor, particularly those of us under fifty, will get rich not by shooting for $1 million, but by keeping our cost of living low, buying stocks such as Realty Income regularly (the ticker symbol is O), and reinvesting the dividends these stocks pay methodically and obsessively.