When you are doing online stock trading, you need to decide whether you'd like high growth stocks or stocks that are safer but may not have as much growth potential. Some investors would prefer to avoid too much risk. Safe stocks are their choice, and it isn't hard to see why.

These investors may be elderly or middle-aged individuals who have retired and require a flow of consistent income each month. Or they may foresee various real needs they may have to satisfy such as their children's education, and would therefore need to rely on their investment capital for satisfying them.

Risk-averse investment needn't necessarily be growth-resistant. Motley Fool's analysts identify an REIT (Real Estate Investment Trust) that can help you relax while growing your income and your share-price growth potential.

Why Enter the Retail Industry with Realty Income

Realty Income (NYSE: O) is one of these REITs that are the most risk-averse. Now it is true that there are many retail industry subsectors that are struggling, but the tenants of Realty Income's freestanding retail properties aren't. Realty Income boasts over 4,600 properties in 47 various industries. It has 246 commercial tenants spanning these industries. These properties are situated in 49 states as well as Puerto Rico. Most of the properties of Realty Income function in retail segments that are resistant to recession and competition:

  • These segments are service-based and immune to online competition since these are places such as restaurants and movie theaters that people need to go to, no matter what the economic situation is. They also deal with essential goods and services such as gas stations, drug stores, etc that are also resistant to recession, stock market crashes and online competition.
  • The company also deals with businesses selling bulk items that sell to the consumers at highly discounted rates such as dollar stores and warehouse clubs. These tend to perform better in economies faring poorly.
  • But the other strong point is that Realty Income isn't restricting itself to retail. That gives it further opportunities for growth. The company is diversifying into agricultural, industrial and office properties. Investment-grade tenants occupy most of these properties that account for 20% of Realty's portfolio.

Lease Structure Ensuring Consecutive Dividend Increases

The lease structure of Realty Income also enables risk to be mitigated. Long-term leases are signed by tenants for a 15-year average initial term, with the tenants required to pay insurance, maintenance and property taxes on the properties, with built-in rent increases. This helps shift those variable expenses from Realty. Thanks to these measures, occupancy rates at Realty properties have always been 96% or more. The company has therefore been able to raise its dividend payment for 76 quarters consecutively.

So if you're looking for a safe stock with safe and more or less guaranteed returns, you might want to consider the Realty Income REIT. For such insight in online stock trading, you always need to be in touch with, and have a clear idea of the markets. At TradeZero, we offer you the technology for that plus many other features such as commission-free trading. Contact us at +1 954-944-3885 or email support@tradezero.co.


The content provided here is solely for informational and educational purposes and does not constitute an offer to sell or a solicitation to buy any security or instrument which may be referenced upon the site, or an offer to provide advisory or other services by TradeZero in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Investors are advised not to rely on the information contained in this writing to make an informed investment or financial decision. TradeZero explicitly disclaims all liability for any action taken based on any information contained in this writing.