Investing in real estate is tricky, as it typically requires a lot of money to buy properties, and it can be hard to unload them quickly if you need to. Instead, you might consider real estate investment trusts, known as REITs. A REIT is a company that buys lots of properties and rents them out; it also trades like a stock, so shareholders can profit as the company grows in value and pays dividends. A good REIT to consider is Realty Income (NYSE: O), which focuses primarily on the retail sector.
Realty Income specializes in single-tenant commercial properties rented out under long-term leases. It recently owned or held interests in 13,118 properties, which were leased to 1,303 clients in multiple industries. It also boasts a 99% occupancy rate, so it’s been able to generate steady, consistent income.
Realty Income’s dividend is a key attraction, recently yielding 5.2%. It has been increased for 25 consecutive years, and it’s paid on a monthly basis instead of the more conventional quarterly one.
Realty Income’s diversity of commercial properties means that the company is less volatile than more specialized REITs, because if one industry is doing poorly, chances are that another one in the company’s portfolio will be doing well.
Realty Income also has an excellent balance sheet, rated A- (investment grade) by S&P Global Ratings. Income-seeking long-term investors should give it a closer look. (The Motley Fool has recommended Realty Income.)
Ask the Fool
Q. Are there any tax breaks for military folks? – B.T., Salem, Oregon
A. There sure are. For example, any combat pay earned might not count as taxable income – though you can count it when calculating your Earned Income Tax Credit, or EITC, which can shrink your tax bill. Enlisted members, warrant officers or commissioned warrant officers can often exclude other items from taxation; these may include accrued leave pay and repayments on student loans.
Moreover, those in the military either live on base or use a housing allowance that isn’t taxable. Those receiving a monthly “basic allowance for subsistence” (covering meals) get to use it tax-free.
Military reserve members may qualify to take early, penalty-free withdrawals from IRA and 401(k) accounts. And those serving in combat zones get an automatic 180-day extension for filing their tax returns, paying their taxes and filing refund claims.
This isn’t formal tax advice, so consult a tax professional for guidance on your personal situation. Learn more in IRS Publication 3 (the Armed Forces’ Tax Guide) at IRS.gov.
Q. What does it mean when a company might be “taken private”? – R.G., Five Forks, South Carolina
A. When companies first sell shares of themselves to the public, they typically do so via an initial public offering, or IPO. Once public, they’re subject to many regulatory requirements, such as filing regular earnings reports.
But they can revert to being not public, with their shares no longer trading on the public market. That can happen in a variety of ways, including a merger with a private company, or having all the shares bought by a private equity firm; that’s being “taken private.”
Companies that have been taken private include the company formerly known as Twitter (now X) and Panera.
My dumbest investment
I’ve made many regrettable investment moves. For example, when Facebook debuted as a stock via an initial public offering in 2012, I was extremely optimistic about it. Post-IPO, the price dropped, and I wasn’t dissuaded at all. I bought at a low price and soon after happily sold with a nice gain. But obviously, I made a huge mistake by not holding on to the stock. I don’t even want to do the math on what that investment would be worth by now.
Much more egregious than that, I made brutal rookie mistakes in my first few investing years, such as buying small-cap stocks I’d never heard of with questionable businesses, thinking that if their share price just went up $1, I’d make a killing. Ouch. – R.C., online
The Fool responds: Selling out of a great stock too soon is a very common blunder – made not only by rookies, but also by seasoned investors. Facebook (which now goes by the name Meta Platforms) recently had a market value below $730 billion, and that’s down considerably, as the company passed the trillion-dollar mark back in 2021. Facebook itself (not counting Meta’s other services) recently boasted more than 2 billion daily users. The good news is that if you’re now bullish about the company’s potential to grow further, you can still invest in it.
And regarding small, unproven businesses – yes, steer clear, unless you’ve researched them well.