Federal Realty Investment Trust (FRT), Realty Income Corp (O): Slow and Steady Sources of Income

This Steady Eddy company looks to maintain a reasonable amount of leverage, while seeking out the best properties. The companies shares yield nearly 7%, and will continue to spin off large amounts of cash, although with more limited upside than both Realty Income Corp (NYSE:O) and Federal Realty Investment Trust (NYSE:FRT).

On its most recent earnings call, the company cited easy money for its less conservative competitors as the main reason for no recent property acquisitions. As other REITs have less stringent borrowing leverage policies in place, they are scooping up properties for higher premiums than in recent years.

Government Properties Income Trust (NYSE:GOV) management team is operating a tight ship. With an operating margin of 32.2%, the company pays out $1.72 per share in dividends, while free cash flow stands at $2.10 per share. The other $0.38 per share can then be used to pay off excessive debt or purchase additional properties, whatever the company sees fit at the time. Management has reiterated that it will continue to provide investors with a safe high yield investment for years to come.

Foolish bottom line

Government Properties Income Trust (NYSE:GOV) provides giant yield that can fund positions in other investments like growth stocks. Conservative investors looking for yield while still wanting to sleep at night should pick up some Government Properties shares and park them in an IRA.

For investors with more time on their hands, the potential of both Federal Realty Investment Trust (NYSE:FRT) and Income Realty to increase their payouts over time is an enticing offer. If and when the Federal Reserve slows down its bond buying program, look for these stocks to go on sale.

The article Slow and Steady Sources of Income originally appeared on Fool.com and is written by Wes Patoka.

Wes Patoka owns shares of both Government Properties and Realty Income Corp (NYSE:O). The Motley Fool has no position in any of the stocks mentioned. Wes is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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