Editor's note: This article has been corrected to fix the yield figure cited for PFFA.
I love having this conversation. There's plenty of passion, but it's easy to see both sides.
I tend to agree with fellow Seeking Alpha contributor Regarded Solutions on the income versus capital appreciation debate. He recently wrote an excellent defense of the Monthly Dividend Company, Realty Income (O):
I suppose a short-term investor seeking a capital gain would be disappointed over the last few years. I know I would, but why do investors own shares of O anyway if not for the income?...
My intent has been to explain why most long-term shareholders of O simply do not care if there is a rough patch in the share price. Of course, if the company cut or stopped paying its dividend, then all bets would be off - which is a risk, of course, however small.
Right on.
In fact, I would go so far as to say that, to a certain degree and in the present environment, I don't care how much it costs to buy a share of Realty Income or brother in income, AT&T (T).
I don't worry at all about the principal value of these investments. It has about zero bearing on my reason for being in income investments such as O or T. I do not own these stocks for any reason other than the income.
As long as the dividends remain intact and consistently grow, I'm good. I would not say this about just any company.
I can say it about O because it's a best-of-breed REIT with a stable roster of clients. As a company and investment, it's built for times like the one we're living through now.
While not as impressive a company (though it could be), AT&T might be one
