Recent Buys – April 4 2019 – O and DPZ

Recent Buys – April 4 2019 – O and DPZ

With the combination of my recent promotion, tax refund, and work bonus, I found myself sitting on some idle cash after having paid off my huge credit card balance.

With the cash, I decided to go shopping in the (stock) market.

Realty Income (O)

realty income

First, I decided to add to my position in Realty Income (O). Those of you who’ve read my past posts on this stock know that I’m in love with it. And yes, it is dangerous to be in love with a stock. This is the only REIT I have in my portfolio and represents my only exposure to the Real Estate sector. It pays a monthly dividend which I love because you can predict its cash flows and received a paycheck every month.

Although, because it is an REIT, the dividends paid out are unqualified dividends which means you will be taxed on it as normal income. Instead of the receiving the beneficial tax rate of up to 15% on qualified dividends.

Because of that, most people prefer to have O in their tax-beneficial accounts, instead of a taxable account.

O – Due Diligence

I did a little bit of DD on this before I added it to my portfolio. The stock has risen into the $70s price range. I originally purchased my first 100 shares of O as a result of a sold put option being assigned. And I’ve been reaping the benefits of both capital gains and dividend income since then.

Based off their annual 10-K report, they had an occupancy rate of 98.6% in 2018, an increase from 98.4% back in 2017. This is on top of the additional 625 properties that was added to their portfolio.

Realty Income Occupancy Rate 2018
Source; Realty Income, Corp 10-K Filing

The majority of their tenants are large, well-known, consumer staples stores. Because they’re consumer staples, they’re less prone to economic recessions and cyclicality, which represents lower risks.

They’ve also increased their dividend payouts this year from $0.22 to $0.0221 to $0.0226, all within the last year.

As a result of these factors, I’ve increased my position in O from 100 to 200 shares. My average cost of is now $62.81 per share, up from $60.00 per share.

This means O will be paying out a total of $45.20 every month instead of $22.60.

Dominos Pizza (DPZ)

dominos pizza

Dominos has been a stock that I’ve been looking at for a long time. And boy did I wish I had bought this way back during the recession. Because they have done nothing but gone up over the last 10 years. And they’ve been quiet about it too.

This isn’t an explosive¬†WOW! stock like MU or TSLA or DRYS was. This happened very gradually. And without any significant changes to their business either. Although their pizza has gotten pretty decent and tolerable from when I first had it over a decade ago.

Dominos Pizza Stock DPZ

DPZ pays a small dividend of 0.87%. Their dividend history only dates back to 2013 and their dividend payout has increased from $0.20 per share to $0.65 per share today.

This increase represents an annual dividend growth of nearly 22% per year.

As a result of the dividend growths and gradual capital appreciation, I opened my first position in DPZ today, purchasing 20 shares at an average cost of $252.74 per share (oof, so expensive). This will result in an added $13 per dividend payment from DPZ.

 

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