I just made a massive buy order in my dividend stock portfolio. I increased the size of a highyielding position by 50%. I'm talking about Realty Income (O), the monthly dividend company. Of course, this move comes with risk, and I look forward to sharing those risk factors in the video today.

Timestamps:
0:00 Introduction: I just increased my position size of my Realty Income (O) position by 50%.
0:23 Check out the pinned comment for my Patreon.
0:43 SEGMENT 1: VALUING REALTY INCOME
0:44 20Year Treasury is at 5.146%. This is a somewhat risk free (or at least reduced) proxy.
1:12 When I buy a REIT, like O, I have to compare to the Treasury yields.
1:27 Realty Income is a bondlike proxy.
1:39 KEY POINT: The value of Realty Income (O) is in the leases, more than the real estate itself.
2:00 SEGMENT 1A: BELLAGIO LEASE EXAMPLE (5.2% Cap Rate)
2:18 The cap rate is just slightly higher than the 20year longbond, although there are modest rent escalators.
2:59 Realty Income is in longterm leases.
3:27 RISK: If rates skyrocket, the value of O's longterm leases will plummet.
3:55 If interest rates double, the value of the lease will get cut in half, and the REIT will fall in value.
4:30 IMPORTANT: I'm making the calculated bet that interest rates have probably peaked.
4:58 SEGMENT 2: MY REALTY INCOME PURCHASE (Metrics Analysis)
6:10 I back into a Price/AFFO of roughly 12.59. This is a great value, in my opinion.
6:48 I love their monthly distributions. These make budgeting easy.
7:05 The distribution yield is a staggering 6.16%.
7:35 Realty Income (O) is a bondlike proxy, but it yields more than the Treasury and has builtin increases (yieldoncost).
7:52 Over the last 5years they have increased the distribution by 3.03% per year, on average.
8:08 Key Point: Bonds reset. We don’t know where interest rates will be in 20 years.
8:28 I look at O as a "forever yield".
9:13 Diluted AFFO per share is growing over time. New shares are productive.
9:24 How Realty Income raises capital for investments.
10:08 AFFO per diluted share has increased with a CAGR of 5.1%.
10:53 Balance Sheet Analysis (Shareholders' Equity Looking Great)
11:25 O is trading at a Price/Book of 1.11. This is a key reason that I purchased more units.
11:53 RISK: If interest rates go way up, this could affect the value of their assets.
12:41 SEGMENT 3: EARNINGS REPORT METRICS
12:42 Balance Sheet Analysis
13:46 Historical FFO and AFFO
14:13 SEGMENT 4: PROS AND CONS OF REALTY INCOME (O)
14:27 PROS
14:28 Starting yield of 6.16%
14:40 Bondlike proxy with no expiration date, and builtin increases (yieldoncost)
15:00 Love the AFFO per diluted share is growing
15:16 PEequivalent in the 12s
15:23 1.11 price/book
15:30 Occupancy is ~98%+
15:47 CONS
15:51 $16.5 billion notes payable, interest rate risk, and debt interest rate risk against their leases.
19:10 Taxes with REITS are different than with qualified dividends. More tax complexity.
20:05 Check out my Patreon in the pinned comment.
20:53 DISCLOSURE AND DISCLAIMER

DISCLOSURE: I am long Realty Income (O). I own this stock in my personal dividend stock portfolio. I'm also long Treasuries.

DISCLAIMER: All information and data on my YouTube Channel, blog, email newsletters, white papers, Excel files, and other materials is solely for informational purposes. I make no representations as to the accuracy, completeness, suitability or validity of any information. I will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use. All information is provided AS IS with no warranties, and confers no rights. I will not be responsible for the accuracy of material that is linked on this site.

Because the information herein is based on my personal opinion and experience, it should not be considered professional financial investment advice or tax advice. The ideas and strategies that I provide should never be used without first assessing your own personal/financial situation, or without consulting a financial and/or tax professional. My thoughts and opinions may also change from time to time as I acquire more knowledge. These are, as discussed above, solely my thoughts and opinions. I reserve the right to delete any comments for any reason (abusive in nature, contain profanity, etc.). Your continued reading/use of my YouTube Channel, blog, email newsletters, whitepapers, Excel files, and other materials constitutes your agreement with and acceptance of this disclaimer.

COPYRIGHT: All PPC Ian videos, Excel files, guides, and other content are (c) Copyright IJL Productions LLC. PPC Ian is a registered trademark (tm) of IJL Productions LLC.