I recently found out about this one while looking for different dividend stocks I can add to my portfolio. So I did a decent amount of research on STORE Capital, a triple net-lease REIT with a diversified portfolio, and I’m going to buy more of it and DCA my way to create a sizeable position.
What is STORE Capital?
STORE Capital Corporation ($STOR) is an internally managed net-lease REIT, that is a leader in the acquisition, investment and management of Single Tenant Operational Real Estate. They are one of the largest and fastest-growing net-lease REITs and own a large, well-diversified portfolio that consists of investments in 2,788 property locations as of September 30, 2021.
STOR’s portfolio generally fall into three categories:
- Service
- Restaurants
- Education
- Gyms
- Repair Shops
- Retail
- Furniture Stores
- Car Dealers
- Farm
- Grocery Stores
- Manufacturing
Some of STORE Capital’s top tenants include AMC Theatres, Ashley Homestore and Camping World.
Most of their tenants have an in-person quality to them – people need to look at the product or service before purchasing. And even if there is a shift in using e-commerce, their tenants continue to generate business by adding an e-commerce element. And because of their strong tenant base, STOR has an occupancy rate of over 99%.
Dividend Scorecard
Why I Bought It
I really like REITs because it’s a simple way for me to get into real estate without having to deal with complicated stuff. One of the plans I’m trying to implement right now is increase my REIT holdings for 2022. So I’m trying to get ahead while the market and stocks are dipping a little.
Another reason is that Warren Buffet actually holds around 10% of the company. From what I know, they initially bought STOR around 2017. And they saw a buying opportunity in the REIT space in January 2021, so they increased their position in STOR.
From what I learned, the triple-net lease model is a great business model, especially for STORE Capital tenants, because the tenant is mainly responsible for paying insurance, taxes and maintenance on the property, in addition to paying rent.
For STORE Capital, that means they continue to collect consistent rent income, free from the responsibilities of the property.
For tenants, it frees up capital for them to be used on other operating expenses. They have lower rent, but it is offset with their other expenditures for the property, which they have more control of.
Plus, the management for STORE Capital does intense due diligence on their tenants. Almost 70% of their tenants generate revenues of $50 million per year. They also do industry research on their tenants to make sure that they have a strong enough moat to support lease performance. These tenants are very big companies that can weather economic downturns due to their financial strength.
My Plans for $STOR
I’m planning to buy more of STOR in the next coming months. Like I mentioned earlier, my 2022 plans for my dividend portfolio involves increasing my REIT holdings. STOR is going to be one of the core plays I have, alongside STAG and O.
At the current price levels of $33, it may be a bit high for my budget. But since I’ll hold this stock for a long time and rely on its dividends, the price won’t matter at all. I’ll just DCA my way to a bigger position, while keeping the costs low.
Right now, I own 3 shares of STOR with an average price of $34.06, and it accounts to 1.36% of my entire portfolio. I’m thinking of getting my REIT holdings to maybe 30-40% of my portfolio. And maybe get STOR to 10%.
This is still a temporary plan, but I want to get ahead before the next year starts. These numbers can change if things in my life and the market go crazy. But stick with me because I will have a better sense of my plans and goals for this portfolio for next year.