Invest $3,000 in Buffett REIT Store Capital (NYSE:STOR) now? That’s exactly what I want to do. As a result, I already have a major position in the Real Estate Investment Trust. The first reason, however, is that I want to catch up with two other names.
W.P. Carey and Realty Income are significantly larger in terms of total investments. If I now add 3,000 euros to Store Capital, I get roughly the same initial total investment. That should bring me a lot of passive income in the long term.
But elevating one’s position isn’t the only reason. We also want to discuss two more today.
Now 3,000 euros in Store Capital: Quality Time!
For me, Store Capital is a real estate investment trust that I classify in the area of quality. The REIT has a very broad portfolio of 3,000 units, all of which have triple net leases. That alone should bring enough diversification and quality with a long-term perspective to enable solid rental income and funds from operations.
But it’s more about quality time and why I’m putting $3,000 into this REIT. At the same time, the equity base is quite solid for me. And the debt is comparatively low. Store Capital had approximately $4.96 billion in debt at the end of the second quarter. Alongside that, there’s over $10.3 billion in assets, which to me is solidly capitalized.
In addition, the US REIT currently has a dividend yield of 5.4% with a price-to-FFO ratio of around 13. So I see an opportunity for Store Capital to generate a good overall return. Yes, even one that should beat inflation. There is also another 13.2 year average remaining lease term, which also means we can expect a lot of quality and a defensive, stable base. Reason number two is definitely quality.
An imminent dividend increase
The admittedly weakest reason why I invest 3,000 euros in Store Capital again has to do with a certain timing. Of course: I like the valuation, the payout ratio is sustainable and the prospect of a solid return is there. But there could now be a positive effect in the short term.
Store Capital’s management is likely to increase its own dividend per share this fall, if at all this year. Of course, this also increases the short-term dividend yield that I receive on my invested capital. The expansion of the allocation and the quality that comes with this REIT are the more important reasons for me. But still, overall, I believe Real Estate Investment Trust is a good choice for passive income and more with a long-term perspective.
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