For my second purchase today I bought shares of Realty Income (O), a large and diversified retail REIT. I provided some information about O in a post last week when I started my position. The continued decline in the stock price motivated me to average down by doubling my position.
I bought 55 shares of O at the price of $38.44 per share plus commission, giving me a 5.66% yield on cost and reducing my cost basis by over 1% to below $39 per share. At the current dividend rate, I can expect to receive monthly dividends of $10.00 from this purchase, which will add a total of $120.00 to my annual dividend income. This purchase was made in my Roth IRA using rollover money. I now have a total of 110 shares of O and I will receive combined monthly dividends of $20.00. My forward 12-month dividend total increases to $3,486.
What can I say? I continue to think there are good buying opportunities in the REIT sector, so I figured I might as well take advantage of them. That said, HCP and O are now relatively large, equal-weight positions in my portfolio (3.4% and 3.3% weights, respectively), motivating me to look more closely at other REITs from this point forward. However, I'll likely cap my REIT exposure at a combined weight of no more than 10% of my portfolio. I'm investing rollover money more quickly than I anticipated, but I'm happy to do so if I can find stocks trading at attractive valuations.