The Importance of Cap Rates in Realty Income

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A lot of people are used to looking at data in terms of earnings per share. But that is not how we should be looking at real estate investment trusts. Basically, they can do large kind of depreciations which can affect their earnings. They are susceptible to more one-time big events that they have to pay off. So I think it's always key to look at funds from operations. That's the key metric here. And if you actually look at that for a company like realty income, it is in around 90%.

This week we have a jam-packed show.

We start by discussing British American Tobacco ($BTI, $LON:BATS) who replaced its CEO Jack Bowles after the company received a fine of $635 for doing business with North Korea. EDGI talks about the number of intangibles on the company and we give our thoughts on the amount of goodwill the company holds on its balance sheet. Intangibles make up ~70% of the balance sheet. Goodwill is approximately 25% which is a lot. Combustibles is declining rapidly however the dividend seems safe at ~50% payout to FCF.

Dividend Hikes this week - Chubb Limited ($CB) hikes dividend by 3.6% to $0.86 quarterly. This marks the 30th consecutive annual increase in the company's dividend

Our main topic centers around Realty Income ($O).

Why are we talking about Realty Income
What makes them so special
What concerns us about Realty Income
How do we analyze a company like Realty Income
What is our fair value valuation of the company

We finish the show off with lots of questions from the community

Tickers mentioned are - $BTI, $O, $CB, £CSN, $MLI,$BUD, $DIS, $TGT, $WBA, $SCHD, $MO, APD, $TSN, $MMM, TYO:8058 WHA.AS, SBMO.AS, SIE.DE, $PYPL, $AFG, ALV.DE,NN.AS, $TROW, ASRNL.AS

Links mentioned in the show

Company Deep Dive - NextEra Energy Partners (NEP) - (dividendstockpile.com)

Why Life With Dividends Sold Digital Realty Trust ($DLR)

https://dividendtalkpodcast.com/

FINVIZ.com – Stock Screener

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