Passive income must fulfill three critical criteria: reliability, predictability, and consistency, pretty much like the paycheck from work. So, if you're looking to boost your passive income today, National Retail Properties (NN) is an excellent pick to get you started, suggests Rida Morwa, editor of High Dividend Opportunities.
National Retail represents passive income at its finest. The REIT has a business model with minimal Capex due to triple-net leases passing over Common Area Maintenance ('CAM') and almost all responsibilities to the tenants. This means that NNN has minimal exposure to inflation in its expenses.
NNN has a highly diversified tenant base, with a portfolio of over 370 tenants across 48 states in the U.S. and with business spread over 37 lines of trade. This means short-term headwinds to specific sectors of the economy due to extraneous factors such as the global pandemic, natural disasters, and cultural shift in consumer preferences will have little impact on NNN's rent collections.
NNN's relatively unscathed performance during this pandemic evidences this. NNN's occupancy never fell below 96.4% in over 19 years. It is safe to say that the bulk of COVID restrictions are in the rearview mirror, and NNN is on track to continue rewarding investors with stellar execution.
In February, the company announced its Q4 and annual performance numbers.Full-year FFO of $2.68 covered the annual dividend 1.27 times. The REIT maintained high occupancy levels at 99%, with a weighted average remaining lease term of 10.6 years - meaning rent payments will continue to flow in for the foreseeable future.
NNN increased 2022 Core FFO guidance to a range of $2.93-$3.00/share, indicating comfortable room for dividend increases. NNN's 32-year history of dividend growth is set to continue, and its current yield is above its 10-year average, making it a valuable opportunity for investors.
NNN's triple-net lease business model and its geographic and industry diversity are clear indicators of a robust company, and its solid track record of dividends makes it an ideal pick for your income portfolio.