Wingstop, Walgreens, and Dollar General: Why I Prefer Realty Income Stock to All 3

Core Insights - The retail sector is characterized by both rising and falling companies, with examples including Wingstop, Walgreens, and Dollar General, highlighting the preference for retail-focused REITs like Realty Income [1][6][10] Retail Sector Dynamics - The retail sector's performance is heavily influenced by consumer demand, leading to volatility in stock prices and dividend reliability [2] - Walgreens, once a reliable dividend payer, cut its dividend due to a slowdown in its pharmacy business and is now transitioning to a private entity [3] - Wingstop experienced a 36% revenue growth in 2024 due to the opening of 349 new locations, yet its stock has lost over a third of its value in the past year [4] - Dollar General opened 608 new stores in 2024 and plans to open another 575 in 2025, but its earnings fell nearly 33% year over year, resulting in poor stock performance [5] Investment Strategy - Selecting winners in the retail sector is challenging due to the unpredictable nature of retail concepts and the performance of companies [6] - Realty Income, a REIT with over 15,600 properties, focuses on well-located retail properties, with 73% being single-tenant locations, utilizing a net lease approach to reduce risk [7][8] - Realty Income has a history of three decades of annual dividend increases and currently offers a dividend yield of 5.7%, making it attractive to income investors [7] - The REIT's strategy of acquiring well-located properties allows it to maintain asset value even if tenants struggle, providing a safety net for investors [9] Conclusion - The recommendation is to consider retail-focused REITs like Realty Income instead of trying to pick individual retail winners, as this approach may yield more stable investment outcomes [10][11]