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SA Interview: The Bear Case For Popular Dividend Growth Stock Realty Income With Arturo Neto, CFA - Part 1

Published Wed, 11 Sep 2019 09:00:00 -0400 on Seeking Alpha

This interview was selected to be shared with PRO+ subscribers. Find out more about PRO+ here.
Below is part 1 of the PRO+ team's interview series that provides a contrarian take on popular dividend growth stock Realty Income (NYSE: O). Arturo Neto, CFA runs a wealth advisory firm and has almost 30 years of experience in the financial services industry.
Seeking Alpha: Before we discuss the bearish thesis, what do you think the "consensus" bullish thesis is? Why is it such a popular stock among the dividend growth investing crowd?
Arturo Neto, CFA: The company is a well-oiled machine and has raised its monthly dividend over 100 times since it went public. There isn't much not to like about it. Its business model of triple-net leasing means that the risk of any increases in operational expenses is passed on to tenants. But it's not just the triple-net lease factor either - many of the company's tenants are in internet resilient segments, like drug stores, convenience stores, discount retailers, and other service and entertainment venues.
It's also popular among the dividend crowd because it pays a monthly dividend instead of a quarterly dividend. For investors relying on income for monthly expenses, it's such a convenience not to have to figure out which month your dividends will be paid. It's called the Monthly Dividend Company, after all, which from a marketing perspective is genius.
SA: The impressive dividend history is one of its most attractive qualities - what... Read more