From them, you won’t see any big growth and capital appreciation but they can provide a very good dividend yield, so to say monthly cash flow you can live off or re-invest as you wish. Let’s get right into it…
The big „O” – Realty Income
The recession-proof Cashcow as you wish. If you are just a little bit familiar with some good dividend stocks then you have already heard about Realty Income. Realty Income is a Real Estate investment trust. REITs are a very good opportunity for the younger audience to invest in the Real Estate market. It is a cheaper and more accessible way than investing in a rental property.
Quick Note: What is a REIT? REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet several requirements to qualify as REITs. REITs must payout at least 90 % of their taxable income to shareholders(dividends)—and most payout 100 %. In return, shareholders pay the income taxes on those dividends.
Current situation and growth standpoint…
In the last 20 years, the return on my money was 10,6% which is a decent growth in my opinion and if we take a look over the last 20 years then we can see a 690% return on our investment.
P/E ratio isn’t the tool that we use if it comes to REITs. P/FFO ratio(the blue line) is much better and this is only 20.5. From one perspective it is a likable number under 25 but on the chart, you can see where the blue line would be the likable price for O. Right now the price is slightly above this line. In my opinion, it is in the good buy/hold category.
PS.: The company didn’t get any major price hit so it can be called „Recession-proof”.
Dividend from the King:
Realty Income is a dividend champion. 29 years of dividend increasing record. The current yield is 4,01%. They increase their dividends by 2-4% every year which is a little bit low in my opinion. The dividend amount that they are paying is well covered by the cash flow.
Fair value and key opinions
According to simplywall.st and using the Discounted Cashflow model O is undervalued by 55%. The fair value should be around 164$. According to Zacks.com O is a „sell” but the industry is in the Top 35%.
2. – STAG Industrial
STAG Industrial, Inc. (NYSE: STAG) is a real estate investment trust focused on acquiring and operating single-tenant, industrial properties throughout the United States. By targeting this type of property, STAG has developed an investment strategy that helps investors find a powerful balance of income plus growth. STAG works with Amazon together and it is considered a different type of REIT than Realty Income. STAG owns the buildings and facilities that Amazon leases. As long as Amazon doing good they will also do good.
STAG has generated over the last 13 years a decent 12.9% yearly return on investors’ money. It stayed around the blue line always which I think is a good sign and the price isn’t that volatile.
Forward growth is expected to be 4-6%, this coupled with a 4.35% dividend could leave investors with a total return of 8-10% annually.
The dividend is good but the growth is extremely slow. STAG has a 9 years dividend record of paying and increasing. The current dividend yield is 4.35%. The 10-year average increase is about 3%. The dividend is manageable. The payout ratio stays always under 75%.
Fair value and key opinions
According to simplywall.st and using the Discounted Cashflow model STAG is undervalued by 59%. The fair value should be around 82$. According to Zacks.com STAG is a „hold”. It is in the top 29% of the industry and the PEG Ratio dropped from where it was in 2018-2019 which shows us that they aren’t that overvalued anymore.
The third is a different industry for good – PPL – Pembina Pipeline
Pembina Pipeline Corporation provides transportation and midstream services for the energy industry. It operates through three segments: Pipelines, Facilities, and Marketing & New Ventures. The Pipelines segment operates conventional, oil sands and heavy oil, and transmission assets with a transportation capacity of 3.1 million barrels of oil equivalent per day, ground storage of 11 million barrels, and rail terminal ling capacity of approximately 105 thousand barrels of oil equivalent per day serving markets and basins across North America.
Important note: You will find 3 choices when searching for this company. PBA is the American ticker symbol for Pembina, PPL is also an electric company in Pennslyvania but our ticker symbol will be PPL.CA because I’m interested in Pembina but in Canada. So search for PPL from Canada or PPL.CA.
So this third is a very good one to diversify your portfolio, not just into a different sector but into a different country.
PPL has generated over the last 20 years a decent 10% yearly return on investors’ money. It is since 2017 stayed under the blue line so it has a good margin of safety.
Forward growth is expected to be 6.55%, this coupled with a 5.32% dividend could leave investors with a total return of 10-11% annually. Analysts are 75% right about their estimates of Pembina.
Sleep well at nights dividends
The company has a record of 26 years of dividend paying. The dividend increase is much better than I thought with a 4.3% of 10 DGR. The current yield is 5.32% and it is safe considering the fact that the payout ratio stayed always been around 50-60% since 2012.
Fair value and key opinions
According to simplywall.st and using the Discounted Cashflow model PPL is undervalued by 20.7%. The fair value should be around 60$ca. According to Zacks.com PPL is a „hold”. It is in the top 40% of the industry but the PEG Ratio shoot up in the last few years…
If you are looking for monthly income and it doesn’t scare you if the price won’t grow or stays negative for a while then those 3 companies are the bests to get along with. Good diversified, safe, and nothing too crazy about them. Just as it should be, boring companies generate the most wealth!