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Brit Ryle maintains a buy list of real estate investment trusts; according to the editor of The Wealth Advisory, there are only two brick-and-mortar retail stocks you should own right now—one focused on the US and one involved in the Canadian retail market.
Realty Income Corporation (O) invests in the real estate markets of the U.S., mainly through investments in commercial real estate. It’s had an occupancy level above 96% for the past 10 years. And it’s planning on adding $1.5 billion in new properties to its portfolio.
Management here is smart. They take advantage of high share prices to sell more shares and drum up cash. They take advantage of low share prices to do buybacks and get some of those new shares off the market.
And now they’re taking advantage of retailers that can’t compete with Amazon (AMZN) by buying up their properties at discounted prices.
You’d be hard-pressed to find a better long-term investment than this one. Or a better management team. They came through in the most recent report—FFO and revenues were up from last year and in line with analysts’ increased expectations.
Revenue was a bit higher than estimates.
Prices started to climb but have dipped back down with the rest of the market. Now’s a good time to add shares. I’m keeping my rating of “Buy” with a limit entry price of $60. The 12-month target remains at $85.
Smart Real Estate Investment Trust (CWYUF) — known as SmartREIT — invests in commercial real estate — with a focus on shopping malls and outlet centers — and is the largest landlord to Wal-Mart (WMT) in Canada.
Along with Realty Income, this is the one other brick-and-mortar retail-related investment to have. In addition to Wal-Mart, SmartREIT has a bunch of other big-name customers that keep its real estate nearly to capacity.
For the past five years, occupancy rates haven’t wavered far from 99%. Even the latest additions to its portfolio have been filling to that level within weeks of purchase.
Oh, and that dividend hike I predicted last month? Well, management came through and gave us just that. That’s a 3% boost to our monthly payment. And that’s 13% higher than when we first invested.
Prices are down this past month, but that’s just an opportunity to add more shares. Other retailers may fear Amazon, but Wal-Mart doesn’t. And it’s not going anywhere.
For Smart Real Estates Investment Trust, I’m maintaining my rating of Strong Buy anywhere under $35. The 12-month price target is staying at $50.
Brit Ryle is editor of The Wealth Advisory.
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