The automatic gear shift of a Maserati Quattroporte automobile is seen as the car is test driven in… [+]
BLOOMBERG NEWS
It was two Decembers ago that a very important list was published by a very respectable broadcaster.
By that, of course, I mean “25 Things to Learn That Will Impress Your Friends” from Channel 933 out of San Diego.
You don’t get more reputable or worthwhile than that.
Up top at the beginning of the list is the ability to know “the day of the week for any date.” As the site says:
“This one involves a little memorizing, but master this and you’ll be the hit of your next party. Start by knowing the date of the first Sunday of each month, then, when someone gives you a date, you think of that’s month’s first Sunday date and then do a little math to figure out the day of the week.”
That way, you can automatically know when Valentine’s Day is, Halloween, Thanksgiving, and other such holidays off the cuff. Because, you know, that question comes up in parties all the time. And people don’t have “off the cuff” access to Google.
Some of the other suggestions include learning how to:
- Open a beer bottle with a lighter
- Learn the “4-Turn Checkmate (aka the Scholars Mate)” in chess
- Make a paper crane that can flap its wings
- Touch-typing (ten-finger typing).
As you might be able to tell by now, I wasn’t being entirely (or at all) serious with my introductory statements. It’s a little less than an impressive list, to say the least.
I honestly wonder why they put it together in the first place.
A James Bond Lifestyle Without the James Bond Pain
I will say that “lockpicking” – entry #5 on the “25 Things to Learn That Will Impress Your Friends” list – might be impressive. It’s not just a practical skill to know in case you lock your keys inside your house. It’s also a James Bond-like skill.
Therefore, yes, it’s kind of cool. A do-it-yourself trick at its most suave and sophisticated.
But even cooler than that is the ability to invest well. Because, when you invest well, you don’t have to worry about breaking into your own home.
Your home won’t have locks on it at all. Nor will your car or any of your other valuables. Everything, no doubt, will be digitized with special codes and passwords that can’t be so easily toggled or pried apart.
Because, guess what? You can afford those kinds of things.
You can also afford to buy James Bond-like apparel, travel accommodations, and cars. And without having to risk your life for those perks. Which – unless you’re an intense adrenaline junkie – should make those perks even more worthwhile.
Now, I know that my normal way of investing isn’t exactly the most dashing, daring mode of operation. There’s no betting on penny stocks that go from $0.72 to $98.45 (or some such thing) overnight. I don’t even promise stocks that go from $76.31 to $98.45 overnight.
That’s just not realistic. A safe stock – even a stellar safe momentum stock – needs, at the very least, a few months to make that kind of headway. Otherwise, it’s not a safe stock, which is what should be the bedrock of any profitable portfolio.
That’s certainly what I invest in overall. And I’m just not going to recommend anything to you that I wouldn’t be comfortable putting my own money into.
A Better Way to Impress
So no, if you follow my advice, you’re never going to have THAT stock story: the rags to immediate riches (or riches to even greater riches) one that makes all your friends ooh and ahh and wish they were you.
That’s overrated in the long-term anyway.
But I can still give you three real estate investment trusts, or REITs, that offer more than their “boring” brethren.
These stocks give you the opportunity to either:
- Withdraw bigger dividends every quarter to buy impressive “bling” right now
- Reinvest bigger dividends every quarter to buy impressive “bling” later.
While anyone who knows me recognizes that I’d go with the save today to spend tomorrow mentality (boring, I know)… the choice is yours. And, either way, you can still brag to your friends about how well your investments are doing should you so choose.
When you do, they’ll no doubt want to buy in as well. That way, they’ll bump up your stock price to compliment those dividend gains.
There’s a little James Bond-style stealth for you after all.
3 REITs to Rock
Our first REIT that rocks is Simon Property Group (SPG), a mall REIT that recently announced it was acquiring a close peer, Taubman Centers (TCO) in a $3.6 billion transaction (paying cash for all of TCO’s common stock at $52.50 per share).
The deal will further extend Simon’s moat, that is already sizeable given the company’s sizeable cost of capital advantage (one of just a few A-ratings by S&P) and scale advantages (233 retail real estate properties including Malls, Premium Outlets® and The Mills® comprising 191 million square feet in North America, Europe and Asia).
Simon shares now trade at a 30 percent discount to our Fair Value target and a 54% discount to the normal P/FFO range. The dividend yield is 6.0 percent and analysts forecast FFO per share to grow by 3 percent in 2020.Shares now yield around 6 percent and we consider this REIT one of the highest quality REITs to buy in today’s crowded REIT universe.
Another REIT to brag about is Iron Mountain (IRM), a true outlier in the REIT sector that has a diverse customer base of over 230,000 companies. That includes being trusted by over 95 percent of the Fortune 1000 list.”
Even though the company does own real estate – 27 million square feet of it, though it does lease another 59 million – its operations drive its value. And its investment thesis is really rooted in the thousands of box/storage customers it caters to.
The central tenant to our bullish conviction is Iron Mountains ability to accelerate organic growth to drive significant adjusted EBITDA benefits and enable deleveraging. While leverage is a concern (rated BB- by S&P), the company’s latest initiatives to reduce corporate overhead and expand into data storage should pay dividends.
Shares in Iron Mountain now yield 7.5 percent and we have forecasted earnings (or FFO per share) to grow by 8 percent in 2020. Although a higher risk REIT, Iron Mountain trades at a significant discount, and we believe shares could return over 20 percent in the next year or so.
Our final high yield REIT is CoreCivic (CXW), a company that invests in prisons. Although private prisons have become somewhat political, we view the asset class as “critical mission infrastructure” that has become a popular REIT sector based in large part to the fact that the U.S. has the highest incarceration rate in the developed world.
CoreCivic is the largest player in the private sector with a portfolio that includes 105 facilities totaling more than 17 million square feet. The assets generate a steady reoccurring cash flow stream underwritten by investment-grade government tenants.
The primary value proposition for CoreCivic is based on the high fragmentation that exists within the states across the country. Most states are continuing to struggle with overcrowding and are operating at more than 100% capacity.
Meanwhile CoreCivic shares trade at a wide discount, with a dividend yield of 10.5 percent. The dividend is well-covered (67 percent based on AFFO) and offers strong upside (especially if President Trump is re-elected).
I own shares in SPG, CXW, and IRM.