Realty Income: 2 Reasons That Stop Me Short Of Buying This High Yield REIT (Archive)
High-yield REIT with improving fundamentals, but technicals and impairment risks temper conviction.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- Lower rates can spur deal activity, growing the investment portfolio and hence leasable square feet, AFFOs, and dividends.
- Net new store growth in Realty Income's key clients can help boost rental incomes.
- Realty Income's stock is trading at a discount vs peers and also seems undervalued due to falling P/B multiples despite improving fundamentals as seen in rising book values.
- Seller momentum is slowing down on both O vs S&P500 and O vs the S&P500 Dividends Aristocrats Index. But there is no strong buy sign yet.
- A key downside risk I am watching out for in the upcoming Q4 FY24 earnings is a rising impairment provisions mix that is pressuring AFFO margins.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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