- I first heard of Power REIT around five years ago when it was engaged in an ongoing lawsuit.
- With no dividend, why did we just recommend this nano-cap REIT?
- Good question, but I do have a ready answer.
Let me be clear. I’m not bragging about this recent small-cap buy that took off already with more still to come. What I’m doing is telling you about a REIT we discovered that was flying under the radar.
And we just pounced on it at the perfect time.
Back in May, I wrote on Power REIT (PW), formerly known as Pittsburgh & West Virginia Railroad. Founded in 1916, it now owns and leases a 112-mile railroad that runs from eastern Ohio to western Pennsylvania in Marcellus Shale territory.
The railroad track is an irreplaceable property leased to Norfolk Southern Railway under a 99-year lease with unlimited renewal options. Translated: This means the tenant is a high-quality credit tenant – rated BBB+ by S&P and BAA1 by Moody’s.
I first heard of Power REIT around five years ago when it was engaged in an ongoing lawsuit. It had already cut its dividend from $0.40 per share in 2011 to better fund the litigation. And then it 2013, it eliminated it entirely for the same reason.
With no dividend, why did we just recommend this nano-cap REIT? Good question, but I do have a ready answer.
I interviewed the company’s CEO to close out 2020. And on January 1, I wrote this to iREIT on Alpha members:
“PW has pivoted to cannabis real estate. But more specifically, the company invests in cannabis greenhouses, a unique specialty category…
“After conducting due diligence and speaking with management at PW, we decided to purchase 375 shares (at $26.71) for the Small-Cap REIT portfolio.
Keep in mind this portfolio is made for small-cap REITs. So obviously, it's riskier than the Durable Income Portfolio (and the all-new SWAN portfolio we are launching next week).”
Moreover, here’s an excerpt from the actual interview to better explain my thinking on the situation:
Once again, I’m not writing this blog as a victory lap. I usually prefer to let happy subscribers like this do the talking:
“… it's going to pay for the subscription to iREIT. Thanks very much for all your hard work. Your availability and interaction (I've watched for the last year) have been phenomenal. TY” – Bob
So was this latest and continuing winner mere luck?
Maybe so. But our track record makes it very clear that we hold more winners than losers. Consider this snapshot of the Small-Cap Portfolio since inception:
To be clear, the 34% -- and the 5.8% for the Vanguard Real Estate Index Fund ETF (VNQ) are annual returns…
Some would argue that VNQ is the wrong benchmark to use in this comparison. But if you have a better one, please let me know.
Regardless, we’ve been able to generate consistent returns well above 30% per year, in large part because of trades like PW that allow us to hit the cover off the ball!
And like our satisfied customer, Bob, I firmly believe that a subscription to iREIT on Alpha will pay you back in dividends. Or, in the case of PW, which still isn’t paying those out, there will be plenty of high-fives to go around.
Your One-Stop Shop for “Everything Income”
No matter what’s going on around us, iREIT on Alpha remains committed to helping investors make the most of the good times and navigate the bad.
We not only find great REITs at great prices…
We also show you how to spot them for yourself! Our quality scoring tool makes it immensely easier to analyze various REITs’ economic moats and therefore their long-term stability potential in your portfolio.
When you join, you’ll get immediate access to unmatched tools and REIT research… all with a two-week FREE trial attached!
This will also give you access to dozens of C-suite interviews on my Ground Up podcast – just like the Power REIT one – which puts you in a preferable, profitable position to make 2021 yours right out of the gate.
Analyst's Disclosure: I am/we are long PW.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.