REIT: How to Evaluate Them

REITs are typically seen as the dividend cash cows for a portfolio much in the same way the golden snitch is seen as a win for Harry Potter in a quidditch game. These massive dividend payers are a dime a dozen however and their metrics seem to be all over the place. Why, you might ask? This is because of a number of factors.

The most important factor is that an REIT (Real Estate Investment Trust) is a unique type of investment that is forced by law to pay out 90% of their income received as dividend payments to shareholders. This causes your typical method of evaluation to fail. This is because the P/E ratio and subsequently most other common ratios become affected by the fact that the net income is slashed due to those dividend payments. How then can we tell if the REIT in question is worth our investment?

Weekly Wrap Up

What a week it has been. I managed to acquire two great companies, post quite a few paid articles on Seeking Alpha, and I also managed to come in above budget to provide that much more steam into the portfolio. That means that it's ultimately time to look back and see how I feel about it all now that it's all said and done. Let's first look at the articles that were posted on Seeking Alpha:

Hold GameStop - Unclaimed Future Opportunities

AT&T: The Future Is Here

Home Depot: The DIY Dividend King

All in all, I'm happy with the articles that I've posted this last week on Seeking Alpha. I was able to have the chance to have articles on three big companies that I really enjoyed taking a look at. GameStop (GME) was ultimately a hold while AT&T (T) and Home Depot (HD) were buys. At this time, if you've already looked at my portfolio, I only own AT&T but in the future I plan to pick up HD if I can get in on a great price for it. The company has such strong fundamentals and it's ingrained so perfectly into the American household that it would be hard to topple it. As for GameStop (GME), I'll be holding off for awhile. Their core business in gaming stores is definitely threatened with the growing digital game market and I want to see where that business model ends. Also, I fear what the economy taking a fall off the side would do to the business profits. If there are only a few dollars left on the table for an American consumer, I somehow doubt that it would go to used video games at GameStop (however much I'd prefer it to).

As for the budget, paying off the student loans for the wife has freed up a lot of cash flow in our household. Instead of having to spend half of our left over funds at the end of the month on student loans, we can now have that cash as free spending for more investing or for grabbing a few things that are needed. I'm excited to see where future prospects take these funds. I'd like to say that it would go towards paying off the last car loan that we have but quite honestly, the interest rate is so low that it's hard to justify it. I think the money would be a better use in the market where I can make more than what the interest rate charges me in capital gains and dividend payments. This is obviously where the Dave Ramsey school of thinking goes off the deep end in my mind. Why would anyone want to pay off a loan that has an interest rate of less than two percent when they can make three percent or more on the market at any given time.

Anyways, that's all I've got.

Recent Buys: ABBV, STAG

I've said it before and I'll say it again; I love the smell of purchases in the morning. This morning I woke up and after finalizing my budget for March I was able to move a good amount into the investing account. This allowed me to quickly grab a few stocks that I've been looking at for some time now. These two stocks were ABBV and STAG. The purchases are as follows:

New Purchases:

ABBV - 10 shares - $586.90 - 3.90% annual dividend 

STAG - 15 shares - $300.90 - 7.02% annual dividend 

With both of these being added to the portfolio, the portfolio gains an additional (potential) $43.60 in annual dividend income. This gives it a huge boost in payouts for the year as I race towards crushing last years dividend payouts. As this is very important to keep my eyes on, I've also gone back and compiled the monthly payouts for 2015 so that I can better understand not just the YOY growth of the totals throughout the year but also through the month. That is as follows:

As you can see, I've already crushed January, February, and March's last year payouts. I hope that this trend can continue into the rest of 2016. The only threat to that would be if a cut was presented that would severely limit a payout for any of the next few months. As I don't see that sort of thing coming and I doubt that most people can, I won't bother thinking about it too much. I will simply plan to keep my eyes forward towards the future and hope that these picks further bolster a well run portfolio of dividend paying stocks. 

Thanks for following and if you have any feedback, please leave your comments below. I would love to hear from any of my readers, most importantly on such updates as new acquisitions. 

Investing Class

Try not to be alarmed when you start seeing me post new pages on the side of the blog that make you feel like you've returned to college. My brother has almost zero investing knowledge and I offered to help by breaking a lot of it down, step by step for him. If you feel like you could gain from any extra knowledge that is presented, please feel free to read it as it is posted. I am hoping to post about one a week as he will be able to use it during his time in the desert (Middle East on deployment). The plan is to go step by step through all of the material that you would have to memorize in order to become a register investment adviser. By presenting this knowledge to him and writing it all myself, both he and I should gain a few things. He will gain a very good base of investment knowledge that spans the most important styles of investing and the terms most used by investors world wide. I on the other hand will gain a deeper understanding of the topics and at the end I should also be ready to sit for the Series 65 as the material will all have been covered other than the most up to date tax/investing laws that have been placed into effect.

Anyways, these articles should start showing up on the side of the blog soon and they will be exclusive to this blog. I won't be posting any of them to Seeking Alpha as they are closer to me and are intended to only be used by my brother to understand the world of investing. Thanks for reading. 

Moving Forward - Seeking Alpha

Eventually we all reach a point where we have to continue growing outwards to go upward. That moment has happened for me. As of this week, I have started publishing articles for the blog exclusively through Seeking Alpha to expand my audience and gain further feedback on my thoughts. Their reader base is much greater than my own and this should help to breed new knowledge for myself and hopefully that should trickle down further into my readers.

Dividend Investing - Millennials Move Forward

Dividend investing - it's something that most millennials currently don't understand or don't want to understand. To most of them the stock market is a giant jumble of old man funk that shouldn't be touched. In their minds, their money is better served in a savings account before it is more horribly used on a car that they can't afford but at least the payments can continuously be refinanced on. Like it or not though, they're the future of the stock market whether they know it or not.

Positive Net Worth

The road to positive net worth can be quite the trying one for most people. Most of us in this day and age bring on debt into the adulting world. Whether it be from student loans, a bad car choice, or even a bad run in with a roommate that never paid their share, you find yourself deep in a hole that you never thought you would find yourself in. Thankfully, that hole doesn't have to last forever.

You see, I had dug myself into that hole too. I went to college the smart way. First stop was to community college where I paid each semester in full by working as a bartender, model, and bus boy. I was lucky, tuition at the time was a mere $15/credit hour since the schools in my area were restructuring. This saved me a ton of money because it allowed me to focus on passing and not having to worry about any loans as I adjusted to the differences between college and high school. Once I obtained my associates degree however, I had to move to the much more expensive choice that could no longer be avoided. I had to go to a typical four year, rack up the debt, and get out as fast as possible. Even though I did just that, I still eneded up with a sizable debt. Or... I would have if my parents didn't end up paying for it.