Pump up your portfolio with this 6.6%-yielder

Wall Street is watching $100 oil, and Main Street is watching gas prices.

But not me. I’m watching diesel, and for good reason.

Businesses don’t put barrels of crude in their trucks, tractors, or generators. They buy refined fuel.

And that stuff ain’t selling cheap.

AAA reported that, as of September 22, the national average price of diesel was $6.53. That’s up 77% from a year ago (compared to gasoline’s 41% rise) and the highest the association has ever recorded.

Diesel is what farmers use to run their equipment to harvest our food. It’s what truckers need to transport freight of all shapes and sizes from place to place. And it powers construction equipment, too.

So while the vast majority of us don’t ever use diesel directly, it still affects nearly everything we purchase.

I can’t say I’m happy about this status quo as a consumer. But thinking about it did lead my mind to Getty (GTY), a real estate investment trust (REIT) that’s yielding 6.6%.

The company used to be known exclusively for its gas stations and associated convenience stores. Today, however, it sits at a very interesting stopover in America’s enormous vehicle-driven economy.

And all at a very nice price.

Getty, a net-lease REIT, specializes in convenience, automotive, and other single-tenant retail properties. Think minimarts, car washes, auto-service centers, drive-thru restaurants, and fuel stations.

Its portfolio contains approximately 1,224 of these properties across 46 states and Washington, D.C. Not the businesses themselves, mind you. Just the land they operate on and the stores they operate out of.

As such, Getty doesn’t automatically benefit from higher fuel prices. Then again, it doesn’t have to.

Gas stations make up just 7% of Getty’s annual base rent, and only when combined with repair properties. Convenience stores are now its weightiest category, followed by auto-service properties, car washes, and fast-food restaurants.

So Getty isn’t really a bet on gasoline. It’s a bet on automobility. And automobility pays thanks to the triple-net leases it employs.

Longtime readers know I’m a big fan of net-lease REITs. Their tenants pay property taxes, insurance, and maintenance expenses alongside rent, giving them largely predictable income without too much worry about inflation.

Even so, you’ll be happy to hear that Getty’s leases include contractual rent escalators that provide organic growth.

That setup seems to work for its tenants since it boasted a whopping 99.8% occupancy last quarter with tenant rent coverage around 2.5x. And Getty’s weighted-average remaining lease term exceeds 10 years.

Part of this strength comes down to the recurring and/or non-discretionary nature of its tenants. Consumers might wait to buy a new vehicle, for instance. But their old one still needs oil changes and general maintenance even in the best of years.

Or with convenience stores, they tend to offer food and beverages that are easy to purchase on a long (or even a short) drive.

None of this eliminates risk, of course, which I’ll bring back up again shortly. But it does make Getty’s cash flows more resilient than many other landlords can claim.

Getty’s second-quarter operating results reinforce this thesis, showing adjusted funds from operations (AFFO) of $0.62 per share. That represents more than 5% growth year over year, following the annual 5.1% per-share AFFO growth we’ve seen since 2019.

Better yet, management raised its full-year guidance to $2.52–$2.54 per share. At the midpoint, that would be 8% more than the AFFO it saw in 2025.

This is its second guidance increase so far this year. And, for the record, that doesn’t include potential upside from further acquisitions or even developments that haven’t yet closed.

More acquisitions are a real possibility considering how Getty purchased 35 properties during the quarter. They came with an initial cash yield of around 7.4% and a weighted average lease term of over 18 years.

In fact, Getty has invested about $172 million in 2026 through July 22 at an initial cash yield near 7.6%. And it had more than $95 million committed to another 30 convenience and automotive retail properties.

Then there’s redevelopment opportunities, which provide further growth potential still. Getty expects about 18% returns on invested capital from some of its existing projects.

All of this is backed by an investment-grade balance sheet with a BBB- rating from Fitch. Its net debt to earnings before interest, taxes, depreciations, and amortization (EBITDA) is around 5.3x. And its fixed-charge coverage sits at about 4x.

Getty also has no debt maturities until mid-2028, which is nice to see in this high-interest environment. So the fact that its dividend yield is a little on the higher side at 6.6% doesn’t scare me. Its payout ratio is well-covered at around 77% of AFFO.

Plus, Getty has raised the dividend itself for 13 years straight with five-year growth of about 4.6% annually.

Getty currently trades at around 11.7x price to AFFO, which is notably below its historical multiple of roughly 14.2x. Using forward FFO instead, that still gives it a 12.8x valuation, which sits below its normal P/FFO multiple of 13.7x.

These two figures, which measure slightly different versions of cash flow, nonetheless point to the same conclusion: that Getty is trading below its historical valuation.

It’s also trading below several of its net-lease peers, such as:

As already hinted at, consensus estimates call for 5.1% AFFO per-share growth this year. That’s down from its previous record of about 5.5% annually since 2013. And it’s expected to fall further closer to 4% in both 2027 and 2028.

However, combine 4%–5% annual AFFO growth with a 6.6% dividend yield… and investors could be looking at a 10%-plus income-and-growth proposition before assuming any improvement in valuation.

Again, there are risks here, with Getty remaining too concentrated in convenience and automotive properties. It’s working on expanding its fast-food portfolio, mind you; but that’s still a work in progress.

In addition, if the cost of fuel keeps rising, it could pressure consumers and therefore some of its tenants’ profitability. And higher-for-longer interest rates help very few businesses, so there’s that to consider, too.

Yet I believe those risks are increasingly reflected in the current price. Between Getty’s dividend income, earnings growth, and multiple expansion opportunities, I think it could generate 20% total returns or better.

Ultimately, as much as I’m hoping against it, I’m not going to predict whether diesel goes to $7. Or buy crude futures. Or assume that higher gasoline prices will automatically translate into higher profits for convenience-store operators.

I’m following the real estate.

And Getty’s looks good.

Happy SWAN investing,

Brad Thomas
Editor, Wide Moat Daily