How much damage can one phone call cause? More than you’d think.
One 10-minute phone call was all it took for cybercriminals to worm their way into the computer systems of hotel and casino operator MGM Resorts this week.
Chaos spread through the company.
Customers locked out of rooms. Slot machines not working. Credit cards and ATMs down. And website as well as reservation systems offline.
It hasn’t been a quick fix either. Five days have gone by and the computers are still not working.
And now we know that casino operator Caesar’s Entertainment was also hacked recently.
But they decided to quietly pay tens of millions of dollars in ransom to avoid disaster.
Here at the Intelligent Income Daily, we’re focused on finding the safest income investments on the market. Cyberattacks are a growing menace for many companies. But we’ve found one group of companies that’s harder to hit with online threats. And they’re known for providing safe, reliable income…
Today I’ll show you why the owners of hotels and casinos run by MGM Resorts shouldn’t be worried about the cyberattacks on their properties. And I’ll show you why it’s a great time to be investing in one particular income stock.
An Industry Less Prone to Cyberattacks
Cybercrime is one of the fastest growing expenses companies face today.
Last year, it cost American businesses an estimated $220 billion. That was a 44% increase over the previous year.
This year, cybercrime is projected to cost $320 billion. That’s another 45% increase.
And it doesn’t stop there…
Cybercrime is expected to drain over $1.8 trillion out of American pockets by 2028.
But there’s one sector that’s almost immune to these online threats… real estate.
Take a look at the results of this IBM survey tracking the industries most affected by cyberattacks.
Real estate doesn’t even show up.
That’s because the real estate industry deals almost entirely with physical buildings. And the owners of those buildings have rock solid contracts to collect rent every month… no matter what happens with the computers.
That’s why Realty Income (O) is one of my favorite income investments.
Realty Income is a real estate investment trust (REIT) that specializes in triple net leases. Those are contracts where their tenants are responsible for paying property tax, insurance, and maintenance expenses. That’s in addition to rent and utilities.
With triple net leases, Realty Income gets a steady stream of low-risk income. That should matter to you because it allows Realty Income to pay lofty dividends. And the company removes even more risk by focusing on leasing buildings to recession resistant businesses.
Last week, I told you how Realty Income scored an attractive deal on the Bellagio hotel and casino. That’s one of the properties run by MGM Resorts which was affected by this week’s cyberattack.
But I’m not worried about Realty Income collecting their rent check at the end of the month.
After all, MGM is a business that paid 100% of their rent on time through the pandemic.
MGM Resorts will lose some of its profits because of the cyberattack this week.
But they will still pay Realty Income every penny of rent that’s due.
And as a REIT, Realty Income is required by law to share 90% of its taxable income with its shareholders through dividends. That’s a big plus for investors.
Now Is the Time to Buy Realty Income
Realty Income is known as the “Monthly Dividend Company.”
It pays a dividend every month like clockwork. And it raises the dividend at least once a year. In fact, it just announced another dividend increase last week.
Realty Income has kept its dividend growing for 30 years. That means it’s been through three major recessions – in 2001, 2008, and 2020 – without missing a beat and providing its shareholders with safe, reliable, growing income.
The entire real estate sector has sold off this year due to rising interest rates. Higher rates cause stress in the real estate market short-term. Longer term, the real estate market tends to outperform. That’s because interest rates are tied to inflation, and real estate is a proven inflation hedge.
Right now, Realty Income trades at 13.8x annual Adjusted Funds from Operations (“AFFO”).
This financial metric gives investors a picture of the cash a REIT has available for distribution to shareholders.
So to put this in context, Realty Income is currently trading at a 22% discount from its historical average of 17.7x AFFO. That means you can buy the same cash flow for a much lower price.
That’s why it’s a great time to invest in this 5.6% yielding stock.
And Realty Income is just one of the profitable income plays in our Intelligent Income Investor service. In fact, we have an entire SWAN (sleep well at night) portfolio. To find out the names in this portfolio and receive a free pick, click here.
Happy SWAN investing,
Editor, Intelligent Income Daily