What Is This Store Capital Corporation That Buffett Owns???

The other day, I revealed why Warren Buffett is so success. If you want to emulate Buffett’s successful, just buy companies that pay dividends and buy back their stock. Financials almost make up 50% of Berkshire Hathaway's portfolio, so if you really want to emulate Buffett’s success, just buy financial stocks.

The word “dividend” tends to have this calm, soothing effect on investors because you know the company offering dividend has a profitable and viable business model so in good times and bad times, you can sleep better at night. What's Buffett's saying, if you don't find a way to make money while you sleep, you will work until you die. Ain't that the truth. For example, Wells Fargo and Bank of America are set to bring in more than $1.5 billion in dividend income for Buffett over the next year. That $1.5 billion is almost 2% of his net worth.

STORE Capital is an internally managed net-lease real estate investment trust, or REIT, that is the leader in the acquisition, investment and management of Single Tenant Operational Real Estate.

Store Capital holds a diversified portfolio of 2,389 properties scattered across all 50 states with a weighted-average remaining lease term of 14 years. Around 15% of its portfolio is invested in restaurant properties, but preschools, gyms, auto shops and medical and dental centers all make up significant allocations. Service-oriented properties account for nearly two-thirds of the base rent, with the remaining third divided roughly evenly between retail and manufacturing properties.

Source

STORE Capital Corporation is one of highest dividend (3.50% forward yield) stocks in Buffett's portfolio. It's the only REIT currently held by Warren Buffett's Berkshire Hathaway (BRK.B). Buffett bought his stake back in 2017 and is in fact the second-largest shareholder in the company, after Vanguard.

So, how many people read the book,

The book is about two mice, Sniff and Scurry. "Sniff would smell out the general direction of the cheese and Scurry would race ahead." Haw eventually learns to move with the cheese, while Hem remains locked in the old way of doing things, waiting fruitlessly for his cheese to be returned to him. Cheese is a metaphor for what you want to have in your life - whether it is a good job, a loving relationship, money or a possession, health or spiritual peace of mind.

STORE Capital's approach is to “Go for the Cheese...” which is an approach to capital solutions for their customers. Real estate intensive companies have a choice to own or to lease their real estate. Today, leasing tends to be the better option. According to STORE Capital, on average, companies that employ real estate leasing realize the following advantages:

1. Pre-tax equity returns and free cash flows that are typically 2.5X greater.
2. Superior growth potential and an ability to conserve valuable equity resources.

In addition tot Store Capital's 3.50% dividend yield, the company has a beta ratio of 0.19. A beta of less than 1 means that the security will be less volatile than the market, while a beta greater than 1 indicates that the security's price will be more volatile than the market. So while the trade war between the US and China is off one week and on another week, which has caused most of the volatility this year in the stock market. Store Capital's stock price marches to Store Capital's ability to execute their business plan solely.

Also, Store Capital's Funds from operations (FFO) which refers to the figure used by real estate investment trusts (REITs) to define the cash flow from their operations is expected to grow 3.26% to $1.90 per share in 2019.

At the moment, I can't find any flaws with STORE Capital as the chart suggests to go long at the weekly demand at $37.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.