Why I am Selling “O”

It boils down to risk based on the holdings within Realty Income. Although I like O’s yield and monthly dividends, the total returns have been disappointing.

Our Realty Income Holdings

Cindie and I currently own 1,200 shares of REIT O. Those shares are worth almost $70K and the dividend we receive is monthly. I like that, but upon further review, I don’t much care for the total 10-year returns for the shares. The dividend yield is a nice 5.83%, but I am willing to sacrifice yield for quality.

Jussi Askola, CFA, a Seeking Alpha contributor, points out a risk factor for Realty Income: “As a reminder, Realty Income is heavily exposed to Walgreens (WBA), Dollar General (DG), and Dollar Tree (DLTR) today. They are its second, third, and fourth largest tenants, representing them alone about 10% of its rental revenue.” Seeking Alpha Post: Very Bad News For Realty Income

Another Seeking Alpha Benefit

The news items I get from Seeking Alpha authors alert me to potential problems. That gives me an opportunity to reevaluate our holdings. Most of the time I don’t sell an investment based on just an author’s perspective. However, I use Seeking Alpha to compare the stock with other similar REITs that we own. We already have shares of ADC (pays a monthly dividend) and GTY. I plan to buy more shares of each of these when I sell our O shares.

There is no need to panic. You don’t have to sell today. However, if you own shares of Realty Income, I believe it is time to sell them.

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