Tunnel Vision and Narrow Minded
When it comes to investing, it is quite easy to develop tunnel vision. This is just another form of being narrow-minded. Narrow-minded, tunnel vision people often miss out on opportunities or they live life missing out on many things. While it is true that I am a “dividend growth” investor, I am not narrow minded in my investing.
Today I share two examples that really don’t fit the pattern for most of my investing activities. One of the investments is STAG Industrial, and the other is Advanced Micro Devices, Inc. STAG really isn’t much of a dividend growth investment, and AMD does not pay a dividend. So, you might ask, “why do you own shares of these two investments?” That is a good question.
Advanced Micro Devices
AMD is a technology company. It is a part of the Semiconductors industry and was founded in the year I graduated from high school: 1969. The one-year price increase in AMD’s share price is 107%. The five-year price increase is 624%. Now, not too long-ago, people were selling AMD shares like crazy. I did not sell my 700 shares and I watched the value of my investment drop in a way that would make most investors lose heart. But AMD is an artificial intelligence investment.
Instead of selling, I pressed the mental pause button and did not even trade covered call options. However, now that the price has risen, I have been able to trade options again. Since early December I have reaped over $700 in options income. That is a nice “virtual” dividend. Some investors call that a synthetic dividend because you have to make it yourself.
STAG Industrial
STAG pays a monthly dividend. It is a REIT, but I don’t have to manage any of the warehouses. They do all the work and then pay me a monthly dividend. The most recent dividend is not exciting, but it is an increase. STAG is one of three REITs we own that pay a monthly dividend. The other two are Realty Income (Ticker O) and Agree Realty Corporation (ADC). Each of these is slightly different and owning them increases our monthly income and our REIT diversification.
ADC is a retail REIT, STAG is an industrial REIT, and O is also a retail REIT and an S&P 500 company and member of the S&P 500 Dividend Aristocrats index.
Not every dividend investment has to be dividend growth. In retirement it often makes sense to own monthly dividend income investments. Some might argue that they can get a better yield from 1-year CDs. For the short-term that is true. For the long-term that seems doubtful.
STAG Industrial, Inc. Summary Short Description
Stag Industrial Inc is a real estate investment trust that is involved in the acquisition and operation of both single- and multi-tenant properties, although the majority of the portfolio is single-tenant industrial properties throughout the United States.
The vast majority of the company’s real estate portfolio is comprised of warehouse and distribution buildings. Stag Industrial derives nearly all of its income in the form of rental income from its portfolio of warehouse and distribution properties. The company generates most of its rental revenue from its facilities located in Midwestern and Eastern U.S. cities. Stag Industrial’s largest customers include air freight and logistics, automotive, and industrial equipment companies in terms of overall revenue.
STAG Industrial, Inc. Company Profile – The Longer Description
STAG is a REIT focused on the acquisition, ownership and operation of industrial properties throughout the United States. They seek to (i) identify properties for acquisition that offer relative value across all locations, industrial property types, and tenants through the principled application of their proprietary risk assessment model, (ii) operate their properties in an efficient, cost-effective manner, and (iii) capitalize their business appropriately given the characteristics of their assets. They are organized and conduct their operations to maintain their qualification as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and generally are not subject to federal income tax to the extent they currently distribute their income to their stockholders and maintain their qualification as a REIT. They remain subject to state and local taxes on their income and property and to U.S. federal income and excise taxes on their undistributed income. As of December 31, 2022, they owned 562 buildings in 41 states with approximately 111.7 million rentable square feet, consisting of 484 warehouse/distribution buildings, 74 light manufacturing buildings, one flex/office building, and three Value Add Portfolio buildings. While the majority of their portfolio consists of single-tenant properties, they also own multi-tenant properties and may re-lease originally single-tenant properties to multiple tenants. As of December 31, 2022, their buildings were approximately 98.5% leased, with no single tenant accounting for more than approximately 3.0% of their total annualized base rental revenue and no single industry accounting for more than approximately 10.9% of their total annualized base rental revenue. They intend to maintain a diversified mix of tenants to limit their exposure to any single tenant. As of December 31, 2022, their Operating Portfolio was approximately 99.0% leased and their SL Rent Change on new and renewal leases together grew approximately 24.3% and 17.6% during the years ended December 31, 2022 and 2021, respectively, and their Cash Rent Change on new and renewal leases together grew approximately 14.3% and 10.4% during the years ended December 31, 2022 and 2021, respectively. They have a fully-integrated acquisition, leasing and asset management platform, and their senior management team has a significant amount of industrial real estate experience. Their mission is to continue to be a disciplined, relative value investor and a leading owner and operator of industrial properties in the United States. They seek to deliver attractive stockholder returns in all market environments by providing a covered dividend combined with accretive growth.
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