Plum Creek Timber Company (PCL) is a REIT in the timber business. They own and manage millions of acres in 18 states. Management for Plum Creek probably means more than you think. For starters, their timber business involves the sale of logs, lumber, plywood, fiberboard, and more.
In an effort to capture the maximum value for shareholders they also open up their lands for hunting and camping. Plum Creek sell assets found underground, including natural gas, oil, minerals, and stone. Finally, they engage in buying and selling properties in an effort to increase shareholder value.
At the current price of just under $34, the yield is almost 5%. That, together with a long history of regular dividends may help an investor to sleep at night.
It’s a fascinating company. Why not check out the Plum Creek web site, or see what Steve Sjuggerude has to say in DailyWealth about this one?
real estate
PCL, Plum Creek, REIT, timber
Realty Income (O) is a REIT with about 2355 commercial retail properties in 49 states. Their focus is on leasing to stable regional and national retailers. One of the beauties of this business model is the use of net leases. As they put it, “we own properties located on busy street corners or on separate parcels in large 
shopping centers throughout the country. These properties are leased to just one tenant (as opposed to a number of tenants in the same building) and that tenant is responsible for all of the taxes, maintenance and insurance on the properties, in most cases, hence the term “net-lease.”"
I’ve owned and managed residential (past) and commercial rentals (present). (FYI, the commercial is much less hassle.) I can tell you that having tenants responsible for taxes, maintenance, insurance, etc. is HUGE for reasons too obvious to list. In essence, Realty Income is buying annuities secured by real estate–historically a good hedge against inflation, regardless of our current situation.
What are they after? That’s simple. They want to generate very reliable income and pass it on to their shareholders on a monthly basis–hence the name “The Monthly Dividend Company.” It’s a classic win-win situation. Retailers get the cash out of their real estate, lock in long-term leases and focus on retailing. Realty Income (and its shareholders) get long-term income from solid tenants and the potential for real estate appreciation.
Are there any wild cards in the deck? How about this. While they rent to solid tenants, we don’t really know how solid any retailer is in the current economic environment.
For those interested, I would highly recommend that you take a look at their site: Realty Income . After a few minutes there I think you may begin to appreciate just how much management has done by taking a really simple business and keeping it simple! You can get another opinion at DailyWealth.
For now, the Monthly Dividend Company is #1 on my “to buy” list. Does it deserve a spot on yours?
real estate
O, real estate, REIT