Realty Income Trust
Last up is REIT giant Realty Income Trust (O), the commercial landlord that's known to income investors as "The Monthly Dividend Company". The firm's strategy is built around investing in neighborhood shopping centers anchored by supermarkets, with 50 million square feet of leasable space in its portfolio.
Even though the real estate crash shoved Realty Income lower when the recession hit, conservative business practices -- such as buying existing properties with proven performance, and mitigating the risks of leasing to retailers with limited financial wherewithal -- have helped the firm thrive post-recession.
As with utilities, the threat of a dividend drop is the big short catalyst for income-centric investments like REITs. Because REITs like O are legally obligated to pay out the vast majority of their income directly to investors in the form of dividends, they can get forced to cut payouts more quickly than firms with lower payout ratios. That said, while Realty Income doesn't carry mountains of cash on its balance sheet, it does generate enough consistently to easily support its payout going forward.The firm's 4.82% dividend yield doesn't look in peril right now. That could come as a nasty surprise for shorts as carrying costs eat away at their possible returns. Currently, Realty Income has a short interest ratio of 12.22. To see this week's short squeezes in action, check out the Large-Cap Short-Squeezes portfolio on Stockpickr.
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