Monday, August 8, 2011

Recent Buy...

From April 29th through August 2nd, the S&P 500 fell 8%.  

What does that mean to me?...

Time to start buying!

One of the things DividendMantra (and several other bloggers) do on their sites is publish an article whenever they make a purchase of a stock.  If you subscribe to Dividend-Growth-Stocks, then you can receive an email alert of his purchases/sales, but you have to pay.

At DividendPartisan, I have been publishing my purchases and sales together in a 'roll-up' format at the end of each month in my Monthly Progress Reviews.  Well, I have decided to tweak that a bit and still have the monthly summary, but I will write a more in depth article (with the details of each buy) several days within the time of purchase as well.

That said, recently I purchased:

Realty Income (O)
At the end of 2010, Realty Income owned 2,496 properties, the vast majority of which are freestanding, single-tenant retail properties. Realty Income's properties are located in 49 states and total more than 21.2 million square feet of leasable space. Early 2011 acquisitions will add industrial, office, and manufacturing properties to the portfolio. The firm's tenants (after the 2011 acquisitions) will include 134 enterprises, mostly retailers, from 38 different industries. (Source -

What dividend growth investor cannot absolutely love Realty Income?  Let's review a few quick facts:

*17 years straight of higher dividends
*Pays a MONTHLY dividend
*Awesome opportunity to dollar cost average through DRIPs
*An 'A' Morningstar credit rating; also assigned a narrow moat 
*A huge 5.79% Yield (as of 05 Aug)

Well I have been patiently waiting on the sidelines - watching Realty Income for over a year now (fluctuate in price around $33.50 to as high as $36), every month realizing that I just missed another dividend from a great dividend paying (and growing) company. But everything I read was always 'its overpriced,' 'wait for a pullback', etc etc etc. 

And so the months rolled on. Realty Income still faithfully paying those lucky investors who must have got in when it was a good price (or a steal back back in March of 09 at $15 a share). Or maybe they overpayed for it. Who knows.  But they are all getting that monthly dividend.

Now I understand that you shouldn't blindly chase dividends, and that if you 'buy high' there's a greater probability that future returns will be less. Anyone who's been investing for any length of time or has read Peters' The Ultimate Dividend Playbook understands that principle through and through.  

And so I had been watching the stock market (and Realty Income) drop day after day, and I finally thought Realty Income was low enough to buy.  Therefore, I initiated a position and purchased 150 shares at $31.25 on the start of trading August 4th.  Well, as you can easily find out, its price continued to drop and closed at very close to $30 on the 5th.  Should have waited a bit longer I guess, but hindsight is 20-20.  Nevertheless, I think Realty will recover and go back to around $34.  And if it doesn't I'll continue to hold until it eventually does, all the while reinvesting its dividend at lower prices.  Booya!

Finally, despite Mr. Market and O's share price, this purchase increased my annual dividend income by $260.64.  One closing note - this stock was #9 on my Top 20 Stocks Watchlist. I will remove it from my list and add another great dividend paying company for you to consider shortly.

What do you think about my purchase or about Realty Income?

Thanks for Reading,


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  1. And apparently it's still dropping! Hard to time it I guess. DOH!

    That's why I'm holding for the long term...

  2. i boughtasmall postion in may and i love the monthly coumpouding i wouldbuy more but i am now going to by asmuch of cop as i can until the splits business into compnys there for giving shares in two comonys and two dividend streams

  3. I can't speak about O, but I think there are some nice prices out there right now. Good job getting in on the action.

    If the price drop bothers you, maybe next time dollar cost average in over a few months.

  4. Pig,

    Thanks for the comment. I suspected the market to drop, but clearly did not expect this much of a drop. Fortunately I'll be holding for at least 5+ years hopefully.

    You definitely are correct that there are a lot of good deals out there. I've made a few more purchases that I'll be highlighting over the next few weeks.

    Keep in touch,


  5. Partisan,

    First off...sweet picture. I love profizzle and dividizzles.

    You did the same exact thing as me. I also purchased on the morning of 8/4...only to watch my holding go down in value as the day went on. I purchased when the DOW was already down 200 points, and I felt I had good value on my price. Oh, well. I'm ultra long, and it doesn't bother me. I'm ready to buy more!

    I also purchased my recent buy today. Just as I published, I received an email with your recent buy. Good stuff!

    Keep in touch.

  6. Mantra,

    I hear ya...Live and learn I guess.

    We both saw opportunity after it fell 200+ points, but I guess that still was too early.

    Reference the graph on the bottom of my Progress page if you need some motivation. Don't panic when the market drops!

  7. Good to see you blogging again.

    I analyzed Realty Income a couple of weeks ago on Seeking Alpha. My conclusion was that it was a great business, but was overvalued both fundamentally and in terms of its historical valuation. Also, I found the increasing distribution payout ratio to be a red flag.

    With this huge market sell-off, I consider Realty Income reasonably valued again. It doesn't quite meet the entry requirements I put forth in the article for a solid margin of safety, but it's quite reasonable, and recent acquisitions and successes should allow them to reduce the payout ratio over time.

  8. Monk,

    Thanks for the analysis. You are the man! I missed your article; it probably would have helped!

    Anyway, perhaps I was chasing the dividend a bit, but you don't have to hold a company like O too long until the particulars of your entry price aren't that important. I plan on holding for hopefully 20+ years.

    We'll see how it plays out... :) Thanks for the note,


  9. Did you purchase it in your IRA?

  10. Anonymous,

    It was purchased in my dividend income portfolio. I will update my Portdolio Tab after I publish a few more "Recent Buy" articles - that way it is completely accurate. Thanks for stopping by,


  11. Sorry for the follow up question, but aren't the tax implications of owning a REIT in a taxable account very poor? Perhaps I'm confused.

    Keep up the great plan.

  12. Anonymous,

    In my understanding, REITs do not receive special tax treatment as "qualified dividends," and therefore it is important to view them from an after-tax basis. End result is the yield will be a little lower than stated.

    Still can be a great investment though if it's a solid company and pays a high enough yield.

    Any followup thoughts/comments?

    And, any other readers care to expound? Thanks!