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Spirit Realty: I'd Rather Chase This High Yield

May 31, 2023 1:22 PM ETSpirit Realty Capital, Inc. (SRC)O, NNN, ADC29 Comments


  • Spirit Realty Capital, Inc. offers a high yield of 6.8% and attractive total return potential, making it a good investment option.
  • The company has transformed its portfolio to become more resilient to e-commerce disruption and has solid operating fundamentals.
  • With a strong balance sheet and low leverage, Spirit Realty is well-positioned to continue pursuing accretive deals.
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This article was written by

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I am Gen Alpha. I have more than 14 years of investment experience, and an MBA in Finance. I focus on stocks that are more defensive in nature, with a medium- to long-term horizon.

I provide high-yield, dividend growth investment ideas in the investing group Hoya Capital Income Builder. The group helps investors achieve dependable monthly income, portfolio diversification, and inflation hedging. It provides investment research on REITs, ETFs, closed-end funds, preferreds, and dividend champions across asset classes. It offers income-focused portfolios targeting dividend yields up to 10%. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of SRC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (29)

Keep it Country profile picture
SRC-A is good spot for now. The common will get cheaper.
High dividend yield makes it more difficult to do acquisitions since cost of capital is almost as high as cap rates.
@alexalekhine does it matter? I’m perfectly happy getting 7% return without any new acquisitions
@AlexandreD Yes, it matters. If the company's capital costs are low enough to enable profitable growth it will get a higher valuation than otherwise. It's a virtuous cycle thing.
@alexalekhine SRC is still treated as a turnaround and it's time for the market to dish it some respect which I think will happen once the current REIT storm blows over. As long as 10 yr Treasury yields continue to rise, the whole REIT sector is subdued which is why it's prime time to load up on some fantastic income. Once rates stabilize let's see if SRC starts to move up.
I sold my STOR and bought SRC, a large position.
@alschroed I did the same.
@alschroed if SRC goes private or is consumed by a larger public player there will be nowhere to run for good yields. The few who think SRC will command a 25% premium in the event of an acquisition are not only dreaming but that premium will be sucked up in a lower yielding REIT like O. WPC has issues with debt and large tenant lease terminations coming up so I wouldn't look to it as a safe harbor or as an acquirer. The likely exit for SRC, like STOR, will be through the private door and the resulting reduction in the number of retail and diversified NNN's will not serve the long term investor well.
@RayRay1000 I think you are right about O buying SRC, they usually pay a small premium of 10-15%.
spokane rich profile picture
My only REIT - if you had to build a retirement portfolio using 10 or fewer positions w/o ETFs what would that look like ? You have $3M to invest
@spokane rich Buy income!!! BDC, MLP, preffered cumulative stock, baby bonds and CEF and REITS and Blue chip high yield !! I just loaded on APTS reits!!
@spokane rich a must!! ARCC, EPD, ET, AM, OKE,TSLX, O, ARE, CSWC, RNP, THQ….
@spokane rich @Yellowreef44 tax free bonds with a 5% coupon gives you 150K a year to do absofruitely nothing. skip the capital risk and get the income...
Been holding it quite a while love the dividend
This leadership team has done a fantastic job of turning the ship around but given its high cost of capital and lack of Wall Street love my biggest fear is that it will go private or get sucked up by a larger player. In the meantime, full steam ahead.
@RayRay1000 what’s wrong wit getting acquired for 20-30% premium and then move that cash into another REIT like WPC or BDCs
Jambr403 profile picture
@RayRay1000 That's a great worry to have. "Oh no, my REIT just got acquired for a 25% premium over current share price!"
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