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05/01/2019 5:00 am EST

Focus: REITS

Mike Larson

Editor, Weiss' Safe Money Report

Getty Realty Corp. (GTY) is a Jericho, New York-based REIT that owns, leases, and finances gas station and convenience store properties, explains growth and income specialist Mike Larson, editor of Safe Money Report.

The company has more than 930 of them in its portfolio spread across 30 states. They include locations under all the major gasoline brand names, including ExxonMobil, Conoco, Citgo and Sunoco.

Getty makes an attractive investment in an economy that’s likely to slow. That’s because its business isn’t as cyclical as other subsectors in the commercial real estate space, like office and industrial. We all need to gas up our cars and SUVs ... or grab a soda and a quick bite to eat ... regardless of how the economy is doing.

The company has been growing both organically and through acquisitions over the past several years. It spent $537 million adding 238 properties between 2014 and 2018, while also committing capital to the redevelopment of older stations and stores.

Most of its properties — around 75% — now have both gas pumps and a convenience store, while 10% include a fast food restaurant like Wendy’s, McDonald’s or Dunkin’. This increases site revenue and profit opportunities.

Overall, Adjusted Funds From Operations have grown at a 7% compound annual growth rate (CAGR) in the past three years. AFFO is a core metric for real estate businesses, just like earnings per share is for regular corporations.

Its quarterly dividend has also increased at an annual rate of 9.5% over the last half-decade. It now pays 35 cents per share, good for a yield of around 4.3% at recent prices. I recommend recommended the shares and our position delivered handsome 18.5% profits in only six months.

The stock recently broke out to a new all-time high, then pulled back to technical support in the low-$30s. They appear to be basing here ahead of a fresh run higher. Take advantage of that move to buy GTY at the market.

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