Looking For The Perfect REIT, No Tricks Just A Treat

The game boils down to price and value, and the secret sauce is to find stocks with above-average appreciation potential and safe and growing dividends, and most importantly to buy them at attractive prices…ladies and gents, let’s go shopping for SWANs.

Summary

  • By applying margin of safety principles, I am continuously hoping to lower my overall risk to generate greater potential profits.
  • Throughout the year, I have written numerous articles on many so-called SWANs and it’s my goal to maintain outsized exposure to these sound dividend growers.
  • With just over two months left in 2017, I am very satisfied with my overall portfolio positioning; my Durable Income Portfolio has returned ~9.5% YTD.
  • "The quick profits are just froth. They arouse a fever in the blood anddon’t last. The worst thing that can happen to a new spectator is to make a lotof quick money on his first trade." Frank J. Williams

In the upcoming edition of my monthly newsletter (Forbes Real Estate Investor) I will be publishing my quarterly SWAN (sleep well at night) report. As many of you know, I take special pride in my SWAN picks because these REITs are deemed to be the safest divided-payers held by many retirees as well as pre-retirees.

Yesterday I started a series called “What a Fool Believes” in which I am purposely promoting value investing in hopes of steering investors away from the concept of market timing.

As many of you know, I consider myself a value investor, and that simply means I am content with results in that in any given year I expect to generate sound, but not necessarily spectacular, returns. By applying margin of safety principles, I am continuously hoping to lower my overall risk to generate greater potential profits.

With just over two months left in 2017 I am very satisfied with my overall portfolio positioning; my Durable Income Portfolio has returned ~9.5% YTD. Throughout the year, I have been able to capitalize on the REITs that offered the best sustainable competitive advantages, while maintaining adequate diversification across property sectors and geographies.

Throughout the year, I have written numerous articles on many so-called SWANs and it’s my goal to maintain outsized exposure to these sound dividend growers.

My goal for the SWAN is to provide you with a diverse basket of companies that are deemed to be stress-free. A few rules come into play: (1) no small caps (must be at least $1 billion market cap), (2) no high leverage (must be investment-grade rated), (3) no sucker yields (dividends must be paid and covered from AFFO), (4) no flat tires (dividends must grow annually, and no exceptions), and (5) management must be vetted.

Over time, I have found that investing SWANs can not only be stress free but highly profitable.

While many of the so-called market timers are out chasing REITs like Washington Prime (WPG), Wheeler REIT (NASDAQ:WHLR), and Global Net Lease (GNL), I am sitting back drinking a cold glass of lemonade, saying to myself, “why all the drama?”

I remember when I was a kid and I used to watch The Adams Family. Some of you may recall Gomez Adams trying to read the science of tape-reading. As the legendary Wall Street writer, Frank J. Williams explains,

“(Tape reading) is a lost art. The market is too big and broad to judge a stock by its action on the tape. Chart-reading was a high art in the days before the war, when only a handful of stocks were traded in and a million-share day was record. Charts are of doubtful value to the speculator today.”

I encourage you to invest in the paperback, If You Must Speculate, Learn The Rules, and Frank Williams wrote,

“The quick profits are just froth. They arouse a fever in the blood and don’t last. The worst thing that can happen to a new spectator is to make a lot of quick money on his first trade.”

In other words , value investing is the stress free route to investment success. The game boils down to price and value, and the secret sauce is to find stocks with above-average appreciation potential and safe and growing dividends, and most importantly to buy them at attractive prices…ladies and gents, let’s go shopping for SWANs.

Just Beautiful SWANs

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