Getty Pays All our Transportation Costs
One of the benefits of retirement is that I don’t have to commute to do my work. I can work on sermons, blow snow, work in the gardens, tend my aquariums, practice my guitar, teach via Zoom, evaluate, and buy investments, sell options, and even bake my gluten free banana bread without leaving home. As a result, our monthly fuel costs are relatively minor. If I put more than $45 per month in the 2020 Ford Escape, I am surprised, or we are traveling to visit someone. Getty easily pays for all of our transportation costs, including fuel, maintenance, and insurance. They also cover our convenience store purchases with the dividends we receive.
Three Reasons I Like Getty Realty: Diversification, Geography, and Occupancy
There are many different kinds of diversification. One has to do with footprint. I like businesses that cover most of the USA (38 states). GTY fits that requirement nicely. I also like businesses that have multiple partners. Again, GTY achieves that goal. It is also good if a REIT has properties occupied by tenants that can pay the rent. Getty has 99.8% of their properties occupied by tenants. That tells me something about their investing care and due diligence.
I have not been able to find an ETF focused on real estate that meets my requirements – more on that later. Therefore, I think it is best for an investor to buy portions of at least three solid REITs. GTY certainly fits that role. Fidelity, Seeking Alpha, and Stock Rover all agree. It is a “buy.”
EIS Investment Number Six
This is the sixth in the series. My goal is to present arguments in favor of a simplified and uncomplicated way to have income before and in retirement that grows even if we do nothing.
The best way to help you see how easy money works is by example. Today’s example focuses on a company in the Real Estate sector. Getty Realty is a very solid retail convenience store winner.
In each of these educational posts I discuss: 1) The nature of the investment, 2) The reason it may qualify as easy money, 3) The quality of the investment using outside resources to help gauge quality, and the 4) Factors that determine if and when I buy shares of the investment. In each case I will be talking about an investment that we own.
The Nature of GTY
As long as there will be fossil fuels, and I don’t think that will change soon, there will be places to stop along the way to fill up, grab some snacks, and even pick up dinner on the way home.
Getty Realty Corp. is the leading publicly traded real estate investment trust in the United States specializing in the ownership, leasing, and financing of convenience store and gasoline station properties. As of September 30, 2020, the Company owned 1,039 properties and leased 58 properties from third-party landlords in 38 states across the United States and Washington, D.C.
Why I Think GTY Qualifies using EIS*
If you look at my score card, you will see a lot of fives. Even the pieces that are rated four are really quite good for a REIT. The QUANT rating is solid, and the ranking of GTY compared to both the sector and the industry are in the top 10% of all of the similar businesses.
The Income from the Getty Investment
The proof is in the dividends. I don’t trade options on GTY shares, because the only thing I need or want is growth dividends. Cindie owns a total of 350 shares, and I have 1,500 shares. Those 1,850 shares are currently worth $66,156 and the estimated annual dividends from this investment will be $3,182. This means our yield is about 4.8%. Now, it is true that I could buy CD’s and get 5% from that type of investment. However, I also believe that GTY shares will grow in value over time. CDs can never really do that. A $1,000 CD will only ever be worth $1,000.
Factors I Consider Before Buying a REIT
The key factor to remember for REIT investing is that the FFO (Funds from Operations) must be sufficient to pay the dividend. Don’t buy a REIT investment if the FFO number is less than the annualized dividend.
Some popular REIT ETFs are VNQ, SCHH, XLRE, and IYR. None of those hold GTY in their top ten. I don’t think that is a good thing. Furthermore, I don’t want to pay an expense ratio for real estate. IYR charges 0.39%, and VNQ charges 0.12%. SCHH is better at 0.07% as is XLRE at 0.10%. However, the QUANT ratings on these ETFs are terrible. I would not buy them.
Reminder: What is EIS?
EIS is my abbreviation for “Easy Income Strategy.” Each value needs to be at least a “3” or I will pause and not rush to buy. If most of the values are “4” or “5”, I will either buy, or continue to hold or add more shares. Therefore, “5” is a strong reason to buy, “4” is a good reason to buy, and anything lower than a “3” is a cause for potential concern.
GTY fits my requirements as a long-term REIT income investment.
We currently own 1,850 shares of GTY stock.
The Easy Income Strategy – What is Easy Income?
We need to define “easy.” When I say easy, I don’t mean there is no work involved. Rather, the term is meant to convey simplified, unhurried, user-friendly, and uncomplicated. Therefore, it isn’t about trying to sell something, and it certainly isn’t about trading options. It also isn’t about trying to time the market with a buy low and sell high strategy. It is about a process that results in income, and the primary goal is to minimize the time spent while maximizing income that grows over time.
Easy Money is Easy
Easy money is money you can easily acquire. It is income obtained with a minimum of effort. It sounds too good to be true. In fact, most of the time when someone pitches something that is too good to be true, it isn’t true. I think there are some exceptions.