3 Monster Stocks to Buy Now and Hold for the Next Decade
Being large isn't always a benefit for a company, since being too big can lead to inefficiencies and management distraction. However, for real estate investment trusts (REITs) Realty Income (NYSE: O), AvalonBay (NYSE: AVB), and Prologis (NYSE: PLD), size is a huge differentiator. Here's why this trio of monster-sized dividend stocks is worth buying and holding for a very long time.
Realty Income is the largest net-lease REIT you can buy, with more than 11,000 properties. "Net lease" means that the REIT owns the properties but the tenants are responsible for most of the operating costs of the real estate they occupy. With a large portfolio like the one Realty Income owns, it is a pretty low-risk business. However, cost of capital and access to deal flow are both key differentiating factors.
Realty Income's size means that any big acquisition opportunities out there are likely to pass across its deal desk. Moreover, its scale means it can absorb deals that smaller peers simply couldn't manage. And, here's the really big one, it has an investment-grade-rated balance sheet and the stock is generally afforded a premium relative to peers, at least partly because of the size of the business. That means that Realty Income can more easily find profitable deals with high-quality tenants because it has a low cost of capital. This helps create something of a virtuous cycle as these positives compound over time.
Source Fool.com
