Realty Income Goes Ex-Dividend In TEV’s Ex-Dividend Calendar For The 44th Calendar Week

Hello, my dears. Welcome to a new overview of upcoming ex-dividend dates and dividend ideas here on the TEV Blog. Like every week, I want to show you some stocks that will go ex-dividend in the next days. I’ll also review a few companies currently in investors’ focus or that have an attractive fundamental valuation. Additionally, I’ll give you some insights into my retirement portfolio and/or share my thoughts and experiences about individual companies with you. This time, I will talk a little bit about Realty Income, National Retail Properties (both are going ex-dividend this week) as well as a pretty good week with excellent quarterly results.

Why yields are a simple way to screen companies

Dividends are a great thing. Even in bad stock market times, they provide a juicy cash flow per month. If you want to benefit from dividend payments as quickly as possible, you must pay attention to the ex-dividend dates. This date is the day on which shares are traded without their subsequent dividend value. Only if you owned the stocks on this day are you entitled to receive the dividend.

Usually, there are always exciting dividend companies that are worth a second look. And the dividend yield is an excellent way to get an initial overview of companies that may be worth further due diligence. To help you get started, at the end of each week, I will publish the ex-dividend dates for the coming week of individual companies here in the TEV blog.

Why I handpick and double-check the upcoming ex-dividend dates next week

I have recently noticed that many databases do not indicate the respective numbers and dates correctly. Spontaneous dividend cuts, in particular, are only partially taken into account, or in some cases, not at all. As a result, the value of such overviews dwindles enormously.

Therefore, I’ve decided to select individual companies by hand and check the dates and dividend yields on the companies’ websites, which means more work for me but increases this section’s value enormously, so it is worth it ūüôā

Because I’ve been asked about it by some of the readers: I don’t decide my investments based on whether a company goes ex-dividend or not. This overview is simply a way to screen companies regularly. By double-checking the current dividend yields, I scan companies’ business development more or less once a quarter and see if anything significant has changed. In the end, however, comprehensive due diligence always decides whether I invest or not.

Ex-Dividend Calendar

As always, you’ll find some handpicked exciting ex-dividend dates below.

CompanyPayment DateYieldIn my retirement portfolio
Monday, October 26, 2020
Carpenter Technology Corp. (CRS)December 03, 20204.41%NO
Celanese Corp. (CE)November 11, 20202.10%NO
Fastenal Co. (FAST)November 24, 20202.27%NO
Tuesday, October 27, 2020
----
Wednesday, October 28, 2020
BP Midstream Partners (BPMP)November 12, 202013.90%NO
Main Street Capital (MAIN)November 13, 20208.30%NO
Thursday, October 29, 2020
The AES Corp. (AES)November 16, 20202.81%NO
A. O. Smith Corp. (AOS)November 16, 20201.89%NO
Costco (COST)November 13, 20200.75%NO
Morgan Stanley (MS)November 13, 20202.70%NO
Targa Resources Partners LP (TRGP)November 16, 20202.33%NO
National Retail Properties Inc. (NNN)November 16, 20206.00%NO
STAG Industrial (STAG)November 16, 20204.40%NO
Texas Instruments Incorporated (TXN)November 16, 20202.75%NO
Phillips 66 Partners (PSXP)November 13, 202013.17%NO
Friday, October 30, 2020
Aon Plc (AON)November 13, 20200.89%NO
Bank Of Montreal (BMO)November 26, 20205.02%NO
Kinder Morgan (KMI)November 16, 20208.10%YES
Realty Income (O)November 13, 20204.67%YES
Hasbro (HAS)November 16, 20203.03%NO
Casey's General Stores (CASY)November 16, 20200.70%NO

That was a good week for many dividend investors

My goodness, that was a surprisingly great week. A lot of companies have published their quarterly reports. There were some very uplifting statements.

Logitech

What convinced me the most was the Swiss company Logitech. As you know, I am a huge fan of the company and CEO Bracken Darrell (in an article from last month, I wrote a few comments about the company; click here). The figures for the second quarter of 2021 were truly breathtaking:

  • Revenue was up 75 percent in US dollars and 73 percent in constant currency (compared to Q2 of the prior year), exceeding the one-billion-dollar mark for the first time.
  • The operating income (GAAP) grew 372 percent to USD 322 million. EPS (GAAP) rose by 263 percent to USD 1.56.
  • ¬†Cash flow from operations was USD 280 million, compared to USD 107 million in the same period a year ago.

Furthermore, Logitech raised its Fiscal Year 2021 annual outlook to between 35 and 40 percent revenue growth in constant currency. The company’s previous outlook was between 10 and 13 percent revenue growth, which is quite impressive, especially since Logitech always gives a more modest outlook.

Other good news with Procter & Gamble, AT&T, and IBM

But there was a lot of other news, which I think is quite good considering the time we live in:

  • Procter & Gamble achieved organic growth of 9 percent in the last quarter. The reason for this was once again, the more audible prices that the company was able to achieve. Besides, pandemic-related consumption and inventory increases drove sales. Here you see what I always preach. It is worthwhile to buy companies that are in a state of transition. It is essential that these companies operate in a market with a certain future and still generate money. The rest is patience. When in doubt, you need a lot of that. But then companies like Procter & Gamble come along and show you that these big tankers still have a lot of tinder.
  • AT&T was also quite convincing. Although business in the Warner segment suffered from the COVID-19 crisis, AT&T delivered good figures in the other business segments. While revenue was down 5 percent, the last quarter has clearly beaten estimates. Domestic HBO and HBO Max subscribers totaled more than 38 million and 57 million, respectively, exceeding the company’s year-end target of 36 million subscribers.
  • AT&T’s mobility net adds of 5.53 million were also significantly higher than the 2.84 million expected by analysts. The prepaid and postpaid businesses also recorded growth of 245,000 ( versus a consensus of 75,000) and 1.08 million (consensus: 147,000 lost) customers.¬† The company’s broadband business reported a 158,000 net increase, while analysts only expected a 73,000 loss.
  • Against this background, the company now expects a free cash flow of 26 billion or higher with a full year payout ratio in the high 50s (prior: low 60s). This payout ratio ensures that AT&T can pay both debts and dividends (current yield of over 7 percent). And with that, the company does what I want it to do: Keeping the business running, trying to grow, and paying me a big dividend every quarter.
  • With the latest figures, IBM has once again made it clear why it wants to focus on the cloud business in the future. Total cloud revenues were up 19 percent to USD 6 billion (Q2 growth: 30 percent). The former Red Hat business was up 17 percent. Also, at IBM, I am patient and wait. Until then,¬† enjoy the dividend. However, I am still curious about how IBM and its spin-off NewCo will distribute the dividend payments between them.

Know the mind games of your psyche/subconscious

On the day of the quarterly announcement, the price of Logitech shares rose by 20 percent. Logitech with a P/E ratio of over 30 is quite expensive now. Well, hey, price fluctuations are short-term developments. They do not usually bother me. But when they do, it is because of rising share prices.  In fact, I get a stomachache when I have to invest in growing markets. I know that sounds pretty stupid, but I get annoyed every time I pay more money for the same part of a company than I did a month or two ago.

Do you feel the same, sometimes? Be careful. These are all traps set by your subconscious, which can cost you a lot of money. It would be highly disadvantageous if you don’t buy a growing company because you would have to pay more money than you did a month, a year, or even a decade ago. It can quickly happen that the stock price keeps exploding without ever coming back.

Just think about the following: Imagine a portfolio with two stocks. One goes up and up; the other goes down and down. It would be a mistake if you only buy more shares in a company that is performing poorly. I know, I am also using the cost-average effect. But in the end, you should allocate your share repurchases properly. Why should you give your best feed to the worst horse in the stable?

It is much better to buy, or repurchase also shares in good performing companies. This way, you can give the further price increases a real boost. I recently did this with Apple (I am writing about it in my October report). Probably I should have done that with Microsoft, but my psyche is still a little bit blocked ūüėÄ

Two REIT’s with a somewhat fair value

Today I would also like to take a closer look at two REITs. One REIT is Realty Income, and the other is National Retail Properties. Both are going ex-dividend this week and may offer exciting buying opportunities.

Realty Income goes ex-dividend

Another company that goes ex-dividend is everyone’s darling Realty Income. The monthly dividend payer currently attracts dividend hunters with a yield of 6 percent. Because of the high share price and the high valuation, I have waited for some time before including the REIT in my retirement portfolio. The COVID-19 crisis then gave me a favorable entry. Thus, my investment was one of my “how to build wealth during a crisis” move.¬† Maybe I should have even bought some shares because, in the meantime, the shares have risen enormously. However, share prices are still at a reasonable price level and I am considering repurchases.

Fair value calculation Realty Income Realty Income ex-dividend
Realty Income goes ex-dividend: Fair value calculation Realty Income powered by DividendStocks.Cash

The share price did not quite keep pace with the upswing in the broad market. The reason for this is, of course, the business model. Realty Income rents out real estate and more than 80 percent of all tenants are active in retail, which is one of the industries worst affected by the coronavirus. Nevertheless, Realty Income has a relatively defensive and well-diversified portfolio, as you can see here:

Realty Income Overview
Realty Income overview, Source: Investor relations 

The company is also not dependent on individual companies, which is a considerable advantage if not all tenants survive the COVID-19 crisis. These are the largest tenants:

  • Walgreens: 6 percent of rents
  • 7-ELEVEN: 4.7 percent of rents
  • Dollar General: 4.5 percent of rents
  • FedEx: 3.9 percent of rents
  • Dollar Tree: 3.4 percent of rents

All these tenants have a credit rating of Baa3/BBB- or higher from one of the three major rating agencies (Moody’s/S&P/Fitch). The company generates 48 percent of its annualized rental revenue from properties leased to investment grade tenants, its subsidiaries, or affiliated companies.

So far, Realty Income has not felt the crisis too strongly. Thus the rent collections in September were as follows:

  • Retail:¬†92.7 percent
  • Industrial:¬†100 percent
  • Office: 100 percent
  • Agriculture: 100 percent.

Here, you can find an overview of Realty Income’s September rent collections:

Realty Income's September rent collection
Realty Income’s September rent collection, Source

In view of this extreme crisis, this certainly looks like a stable business to me. In such situations, I like to take action and put such companies in my portfolio and let them slumber there. The dividend scoreboard also looks quite compelling:

  • Dividend Yield: 4.67 percent
  • Years of Dividend Growth: 23 years
  • Payout ratio based FFO:¬† 83 percent
  • 5 Year Dividend Growth Rate:¬†4.38 percent
  • 1 Year Dividend Growth Rate: 3.07 percent.

National Retail Properties 

National Retail Properties is another company that currently looks relatively cheap. I have not yet dealt with the company strongly enough, but there should be similar opportunities and risks as with Realty Income. The market also seems to take a similar view, because it sees the share prices in a far value range.

Fair value calculation National Retail Properties
Fair value calculation National Retail Properties powered by DividendStocks.Cash

I was impressed that the company, which has a market capitalization of 6.1 billion, increased its dividend by 1 percent in July despite COVID-19, which was the 31st year in a row in which the company has increased the dividend. This is how the dividend scoreboard looks like:

  • Dividend Yield: 6.00 percent
  • Years of Dividend Growth: 31 years
  • Payout ratio based FFO:¬† 80 percent
  • 5 Year Dividend Growth Rate: 4.23 percent
  • 1 Year Dividend Growth Rate:¬† 1.97 percent.

The company owns a portfolio of 3,117 real estate properties in 48 states.National Retail Properties leases its properties to more than 380 tenants in 37 industry classifications.

National Retail Properties rent distribution
National Retail Properties rent distribution, Source: Investor factsheet

No tenant is responsible for more than 5 percent of rents, so there is no dependency here either.

Who performs better, Realty Income, National Retail Properties or the market?

I also took a look at which REIT has performed better in the long term or even outperformed the broad market. For me, the winner here is Realty Income. Although the S&P is currently leading, this is only a snapshot due to the COVID-19 situation.

Chart
Data by YCharts

Time to do your due diligence

Has a company caught your interest? Attractive dividend yields should not be the only reason to buy shares of a company. Instead, you must carry out careful due diligence before every purchase. The Internet offers you excellent opportunities in this respect.

My analyses here on the TEV Blog are an excellent way to start (click here). You can also contact me here or ask the community in the comments if they can help with your due diligence.

Otherwise, I use tools like those from Dividendstocks.cash and Seeking Alpha to do further research. You can also find me and my analyses on these platforms. We also have a small but lovely group on Facebook that you can join. We share there only fundamental analyses of companies from various sources. So there is no spamming or anything like that.



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