Income Investors Shouldn’t Ignore This 7.59% Dividend
If you thought about investing in the real estate segment of the market because of its high correlation to wealth generation, this article will go through a real estate investment that offers a high dividend yield of 7.59%.
The appeal from investors is due to the simple business model nature, which is known for being a very steady cash flow investment. However the one issue that holds most investors back is the time that would be needed to bring in the tenant and the responsibilities that come along with this title. This would include fixing leaky pipes, clogged toilets, or chasing the tenant for a check.
There is a method to invest without the need to be the operator of the property. Rather, you would be an investor and collect part of the cash flow directly into your account. There will be never be a need to run around to ensure the properties meet the tenant’s standards. There will be a professional management team in place that makes all the investing decisions and ensures that the property is up to the right standards.
To benefit from such a great investment opportunity, DDR Corp (NYSE:DDR) stock could be considered for an investment. DDR is structured as a real estate investment trust (REIT), which simply means that 90% of its cash flow must be paid out to investors. There are tax breaks given to the company for rewarding shareholders in such a way. Also, 75% of the company’s assets will always have to be invested in the real estate segment of the market, which means that the management team won’t go off course and start investing in new business ventures. Therefore, you understand what you own.
DDR stock operates in two different segments, shopping centers and loan investments. The shopping center side of the business is focused on acquiring, owning, developing, redeveloping, expanding, leasing, and managing the properties. In the portfolio, there are more than 275 properties owned within the portfolio, half of which are done in a joint venture way. The properties are located all across the U.S., in Canada, Russia, and Puerto Rico. The loan investment portion of the business is money lent to another real estate company, through which interest income is earned; of course, this is after the due diligence is completed.
Maklay62/Pixabay
Also the tenants included in the portfolio are with strong retailing brands such as Wal-Mart Stores Inc (NYSE:WMT), TJX Companies Inc (NYSE:TJX), Target Corporation (NYSE:TGT), and Kroger Co (NYSE:KR). (Source: “Conference Call,” DDR Corp, July 26, 2017.)
The many tenants and various revenue streams add to the diversification of the business and lower the overall business risk. Since DDR stock is operating and earning revenue in many different ways, it is less reliant on a single function within the business. Also, there are many different contracts in place that renew at different periods in the future, which means that if there had to be a new tenant found, there will still be revenue earned from the other businesses. Also, some of the clauses in the contracts have a rent increase in place after a certain event if the tenant is continuing to rent out the same space going forward.
Also Read:
10 Best Real Estate Stocks to Own in 2017
REIT ETF List: Earn Regular Income from These Real Estate ETFs
Final Thoughts About DDR Stock
DDR stock is a great stock to consider an ownership stake in to fulfill the need for income, diversification, and exposure to the real estate sector. All this would be achieved without the need to even communicate with the tenants and ensure the properties are up to regulatory standards.
Currently, the income is paid out on a quarterly basis, and is always growing as well. So, therefore, as the revenue from the business increases, so does the dividend, which is a very shareholder-friendly action by the management team.