The Fool’s Take
Realty Income, which owns more than 15,500 commercial properties across the United States and Europe, is one of the world’s largest real estate investment trusts (REITs). As a REIT, it leases out those properties and shares the rental income with its shareholders.
REITs are required to pay out at least 90% of their taxable income to investors as dividends, and Realty Income pays those dividends monthly. It has raised its payout 132 times since 1994, and its dividend yield was recently a hefty 5.7%.
The company mainly rents its properties to recession-resistant retailers like convenience stores, discount retailers and drugstores. (Its tenants include 7-Eleven, Dollar General, FedEx, Home Depot, Walgreens, Walmart and Wynn Resorts.)
Rising interest rates in 2022 and 2023 throttled its growth by stirring up economic headwinds for its tenants and making it more expensive to purchase new properties. Those high rates also made its dividends less appealing than risk-free CDs and Treasury bills.
But as interest rates declined in 2024 and 2025, Realty Income has become a more appealing investment again, with a recent forward-looking price-to-earnings (P/E) ratio of 35, well below its five-year average of 41. (The Motley Fool owns shares of and recommends Realty Income.)
Ask The Fool
From T.H., Venice, Fla.: Some stocks rise on good news about the company while others don’t. Why?
It all depends on what investors have been expecting. For example, if they’ve expected earnings to grow by 12% and the company reports 10% growth, the stock might drop.
Some news may already be baked into the stock price, too. A company’s shares might jump when it announces plans to enter China, but not move much once it actually does open its first China location. Not all news is really news.
From J.P., Lubbock: Can I give stock certificates for single shares as holiday presents to my grandkids?
Yes, but it’s not necessarily the best move. It’s certainly great to introduce young people to investing by giving them some skin in the game, but these days, many companies no longer issue paper certificates, as trading is widely conducted electronically.
If a company still produces paper certificates, you might ask it — or your brokerage, which is usually simpler — for one, but the fee could be several hundred dollars. And cashing in a paper certificate is a hassle, too.
Some websites, such as GiveAShare.com, will sell you certificates for single shares of stock, but they might charge you much more than the share actually costs.
Another way to give shares of stock to kids is by transferring one or more shares of stock(s) you own from your brokerage account to an account belonging to them. If they’re minors, they’ll need custodial accounts, with a parent or other adult serving as custodian.
However you go about it, consider starting with companies they know and admire — perhaps Apple, Lululemon, Nike, Starbucks, Ulta Beauty or Walt Disney.
The Fool’s School
If you’re looking to improve how you think about investing and how you evaluate companies, check out Philip A. Fisher’s classic Common Stocks and Uncommon Profits (Wiley, $28), first published in 1957.
Here are some of Fisher’s views.
–For starters, he said that “The successful investor is usually an individual who is inherently interested in business problems.” That’s true, because if the business world bores you, you likely won’t delve deep into companies of interest or follow them closely. (If this is you, remember that you can do quite well simply by regularly investing money in a low-fee, broad-market index fund, such as an S&P 500 index fund.)
–Fisher was a big fan of “scuttlebutt” research, which involves tapping the grapevine for any company of interest. So for a retailer, you might talk to employees and customers to get their takes on the company’s strengths and weaknesses. Then do the same with some of its competitors.
–While Fisher saw the value in diversification and not having too many of your eggs in too few baskets, he warned against being overly diversified. If you’re invested in too many stocks, it can be hard to keep up with them all.
Also, should one skyrocket, it won’t have as much of an effect on your portfolio’s value. (Opinions differ on the ideal number of stocks one should own, but our Foolish investing philosophy suggests holding at least 25 stocks for at least five years.)
He noted, too, the importance of diversifying by industry — your portfolio may be put at risk if, say, 10 of your 25 stocks are in one particular industry.
–Fisher also noted that all investors make mistakes like selling too soon: “Willingness to take small losses in some stocks and to let profits grow bigger and bigger in the more promising stocks is a sign of good investment management.”
Next week we’ll cover how Fisher evaluated companies, via his list of 15 things to look for when searching for attractive investments.
My Dumbest Investment
From D.E., via email: My most regrettable stock move happened in the early 2000s. I bought shares of Netflix for $16 apiece — and then sold them at $21. I made up for it by investing in shares of Apple in 1997, when Steve Jobs reappeared at Apple. I’ve kept those shares.
The Fool responds: You certainly missed a lot of potential gains with Netflix, as it has been one of the best-performing stocks of the past 20 years. Indeed, if you’d invested, say, $1,000 in Netflix about 20 years ago, that stake would be worth close to $275,000. That’s average annual growth of more than 32%! (For context, the S&P 500 index averaged a respectable 10.7% over that period.)
Don’t kick yourself too hard, though, as no one in the early 2000s knew how well Netflix would do, and it didn’t start offering streaming videos until 2007. Meanwhile, Apple has also been a great performer, averaging annual gains of 27.9% over the past 20 years.
If you’re no longer confident about a company’s future, it’s right to consider selling. If you’re just not sure, you might sell some, but not all, of your shares. Holding on to Apple is a great example of how you can make up for missed gains in one stock by gaining in another.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Who Am I?
I trace my roots to 1995, when my founder set up “AuctionWeb” on the internet, aiming to connect sellers and buyers. (The first item sold on it was a broken laser pointer.)
In 1997, more than 6% of my volume was Beanie Babies — some $500 million worth. In 2000, I started an automotive marketplace and I bought Half.com, a marketplace specializing in used books, CDs and DVDs.
I bought PayPal in 2002 and spun it off in 2015. Today, with a market value near $37 billion, I connect millions of people in over 190 global markets.
Who am I?
Forget last week’s question? Find it here.
Last week’s answer: BMW Group.