Better Stock Buy: Realty Income vs. Dollar General
Shares of retailer Dollar General (NYSE: DG) and retail-focused real estate investment trust (REIT) Realty Income (NYSE: O) are both down materially over the past year. However, there's a big difference between the businesses these two companies operate. That makes one of them a more attractive option than the other unless you like the risk and thrill of turnaround situations.
As a property-owning REIT, Realty Income's business is pretty easy to understand. It owns buildings, roughly 75% of which are single-tenant retail assets, and leases them out. It is a net-lease REIT, which means that tenants are responsible for most property-level costs, like maintenance. Although having just one tenant per property means any single property is high risk, Realty Income's portfolio of more than 13,000 properties means no single property is likely to be a big issue.
In the first half of 2023, Realty Income's adjusted funds from operations (FFO), which is like earnings for an industrial concern, rose to $1.98 per share from $1.94 in the same period of 2022. That's not impressive, but slow and steady is exactly what Realty Income is known for. For example, it has increased its monthly-pay dividend every year for 29 years, with a compound annual growth rate of 4.4% over that span.
Source Fool.com
