The e-Commerce Resistant Code
Happy Cashflow Code Day!
That’s right… it’s another day to grab some cash flow from the biggest real estate companies in the world…
And all you need is a few minutes, a few clicks of your mouse, and the specific cashflow code revealed in this alert!
Summer marches on, and in the news, we hear about the Fed taming inflation…
I don’t know about you, but I don’t feel that inflation is falling as fast as they want you to believe…
The other day I went to the supermarket and couldn’t believe how expensive everything still was…
I guess they didn’t get the memo about inflation getting closer to the ‘target 2% rate’ huh?
This is exactly why it’s more important than ever to grab some dependable cash flow using these cashflow codes…
Because even as prices move higher, we have a way to offset the increase with some cold hard, and instant cash!
Today, we go back to one of my favorite companies in real estate, using one of their cashflow codes for the 5th time…
In the previous four times, we’ve booked a solid $205 of instant income in total.
The reason I love this company is that it focuses on giving money back to its investors in the form of consistent, ‘never miss’ dividends…
As you’ll find out below, this company has an impeccable track record of raising and paying out those dividends…
And I’m not talking about over a few years…
I’m talking decades!
This company owns over 13,000 properties with 1300 tenants in 85 different industries…
It’s the picture of diversification which, in turn, leads to protection…
But not just from the economy…
You see, many of the businesses this company leases to, provide goods and services that are e-commerce resistant…
For example, Walgreens is one of their top tenants…
As you’ll see below, they have a wide variety of non-e-commerce disruptable businesses in their portfolio of tenants…
Time to grab some cash flow for the 5th time by using this company’s specific cashflow code:
O231215C00052500
Before we get to all the details, here’s what I’m going to cover for you:
- The fundamental story: You’ll see why I’m still so excited about this company. Ready to grab some more cash flow from the most reliable dividend-paying real estate company in the world? Then you’re going to love this opportunity!
- How the transaction works: You’ll see how to generate at least $75 in instant cash flow. You’ll see the steps involved… and I’ll show you a screencast showing how to place this trade in your account.
- Ongoing support: If you’re confused by ANYTHING below, simply submit a question here, and I’ll do my best to cover it in our upcoming Q&A podcast that we’ll email you on Tuesday around 4:00 pm ET. Remember, this is a learning process. So don’t be hasty. Learn each week and write down your questions. Then listen to those podcasts to learn even more about what I’m showing you here.
Let’s dive in…
Happy Cashflow Code and Windfall Friday!
In the stock market; it’s August monthly options expiration day.
When I worked on the trading floor of the Chicago Mercantile Exchange, there would be a buzz that still gives me goosebumps…
That buzz meant there was a lot of activity going on in the market because the options contracts that expired today needed to be adjusted into the future of closed.
Those were the good old days, but now, we can make money from anywhere in the world…
And the U.S. stock market is the best market to do so!
The good news is that the August 18, 2023 option promises we collected cash flow from will expire…
That means we’d keep 100% of the cash flow we collected because those contracts expire out-of-the-money.
Here are the put option contracts that expire today:
- Realty Income (O) Aug 18, 2023, $55 put
- Home Depot (HD) Aug 18, 2023, $255 put
- McDonald’s (MCD) Aug 18, 2023, $200 put
- Camden Property Trust (CPT) Aug 18, 2023, $80
There's nothing you’ll need to do as they will be removed from your account over the weekend…
The capital needed for those positions will also be released which means we can redeploy and collect new cashflow!
Today's expiration also means we have had 40 cashflow triggers that have expired worthless for a 100% success rate…
That includes the two cashflow alerts that we needed to roll forward for more time while collecting more money by giving it more time.
Sleeping Well at Night With Weekly Cash From REITs
As we're learning and earning together, making money consistently in the stock market isn't hard…
For instance, buying and holding blue chip companies over the long term is a proven, time-honored strategy for building life-changing wealth…
When it comes to compounding dividends and creating wealth, time is an investor’s most valuable resource…
The K.I.S.S. strategy (keep it simple, stupid) is often the best way to achieve success in the stock and real estate market…
But getting rich in the stock market can be as simple as buying and holding REITs.
Real Estate Investment Trusts were created in 1960 for the average Joe to provide dependable income from real estate…
Without the headache of traditional real estate investing.
These are the best-in-breed real estate stocks, with strong cash flows… wide moats… competitive market share… valuable real estate holdings… excellent balance sheets… and management teams that are generous with shareholder returns.
By using REITs to get exposure, not only will you be able to tap into the power of this amazing and resilient asset class… but you’ll earn safe, reliable weekly mailbox money, too…
And that’s my goal: Help you make weekly real estate income with a few clicks of the mouse.
So, here’s another opportunity to put some mighty dollars right into your account…
Today, we're going to tap into the #1 REIT every real estate investor ought to own…
Not only because this REIT has consistently paid a dividend for 29 years, but pays out monthly…
And for 26 years has seen positive growth, growing at around 5% annually.
So this real estate company can weather any storm and pay investors a dividend as expected…
And today, we’re going to grab even more using this very specific cashflow code to generate instant income:
O231215C00052500
The Monthly Mailbox Money Company
The real estate company I’m going to show you how to generate instant cash flow from today is Realty Income Corp., ticker symbol O.
The company, known as “The Monthly Dividend Company,” has been consistently paying its shareholders dividends since 1994…
And over the past 10 years, it’s gained 185%…
Plus, it pays me a dividend every month.
It has a 53-year track record of increasing dividends – and it’s never missed a payment.
This company has been paying dividends for 50-plus years (since well before it was publicly traded)…
Realty Income has declared 625 monthly dividends and increased its dividend for 99 consecutive quarters…
Realty Income – Investor Presentation
And these dividends are often higher than those offered by other REITs…
This means you can count on reliable payments each month that will increase your capital over time…
To me… that's real mailbox money!
Realty Income is built to last and will outlive us all…
This is a triple-net-lease REIT—one of the sweetest business models in the country…
Realty Income pays for nothing…
No insurance, property taxes, or maintenance.
Realty Income acts as a financing company…
It buys a free-standing building from someone like Walgreens and then leases back the building over long periods, usually 15 years.
It just collects the CPI-linked rent checks and prints money…
Realty Income's free cash flow margin in the last year was 76%.
For context, Mastercard, one of the greatest and most cash-rich businesses in history, has a 45% free cash flow margin…
This is why Realty Income has been able to raise its dividend every year for almost three decades…
But it’s trading below pre-pandemic highs at $84 per share, despite beating estimates five quarters in a row…
Realty Income offers the safest monthly dividend on Wall Street and is 20% undervalued compared to historical values.
This is why we'll be able to collect consistent cash flow from this REIT in the months to come.
Realty Income owns 13,100 commercial real estate properties…
And thanks to its triple-net lease model – which passes the tax, insurance, and maintenance costs on to tenants – it has high margins and tremendous size/scale advantages.
Realty Income – Investor Presentation
The company’s portfolio consists of smaller footprint buildings such as dollar stores, convenience stores, drug stores, and quick-service restaurants…
And it includes larger buildings like grocery stores, home improvement stores, and branded buildings, such as the Encore Boston Harbor Resort.
Their properties are leased to over 1,300 tenants that operate in 85 industries and the majority of their tenants operate in industries that are resistant to e-commerce.
This model reduces financial risk for Realty Income as a landlord… and results in extremely high-profit margins…
And 43% of the company’s tenants carry investment-grade credit ratings, lowering its risk exposure…
Company management continues to aggressively acquire properties, consistently increasing its cash flows…
I love its high-margin business model and believe this REIT will be paying growing dividends for another 50-plus years to come…
That’s how Realty Income has posted positive bottom-line growth in 25 out of the last 26 years…
And the consistent growth has allowed it to provide generous shareholder returns to investors for decades.
Since 1994, it’s generated a total return compound annual growth rate (CAGR) of 15.1%. [CAGR measures a company’s rate of return, assuming any profits are reinvested in the company.]
Plus, it’s in the 80th percentile of S&P 500 companies when it comes to risk as measured by a metric called “beta.” (A beta under 1 means the stock is less sensitive to overall market volatility compared to those that have a reading above 1.)
With its income-generating model, defensive portfolio, and strong track record, I believe it will continue to be one of the best investments to collect mailbox money for decades to come…
So let’s collect some more cash flow using…
The e-Commerce Resistant Cashflow Code
Here’s this week's cashflow code we’re going to use: O231215C00052500
At last glance, this cashflow code is trading between $.70 and $.90 per contract.
So that means for every contract sold I’m going to collect between $70 and $90 of cash flow per cashflow code contract. If you sell more than one contract, the cash flow you’d generate would go up.
How will this cashflow code generate that cash? Well, this cashflow code identifies the Realty Income Corp (O) December 15, 2023, $52.5 put option that we’re selling for cash. (Module 3 of the quick start series specifically covers options pricing and how to conduct these transactions if you need a refresher.)
Here’s a screencast of me finding this cashflow code and entering the transaction in my brokerage account:
Here are the instructions written out…
Action-to-Take: Sell-to-open Realty Income Corp (O) December 15th, 2023, $52.5 put option
Here’s what I do while in a brokerage account if you’re not just copying and pasting the cashflow code. (Remember, depending on what brokerage platform you’re using, it might look different than my video. But these instructions should help.)
Step 1: I type in the ticker symbol O
Step 2: I open the options chain for the December 15, 2023 expiration cycle.
Step 3: I locate the $52.5 “PUT” strike, which is located in the December 15, 2023 expiration cycle
Step 4: I double-checked the ticker symbol, expiration, strike and options contract type or what I call the “cash flow code”: O231215C00052500
Step 5: I click on the “BID” price to open the order entry menu. (The bid price will be lower than the ask price) The order entry MUST say “SELL” & “SINGLE”
Step 6: I select how many contracts to sell-to-open (remember from the quick-start series, this strategy is to “selling-to-open” or “STO… not buying.)
Step 7: I enter my price at $.75 since prices are trading between $.70 and $.90… $.75 is in the middle of the market and will likely get filled at that price which is why I chose that.
Step 8: Click “Confirm & Send” to review the order. This is where I double-check again to make sure that it matches the exact cashflow code, quantity, buying power effect and that I’m selling-to-open.
Step 9: Then I press “send”
Or, if you're using ThinkorSwim, you can paste the pre-populated order with this code SELL -1 O 100 15 DEC 23 52.5 PUT @.75 LMT
Remember, it’s best to use your paper trading account for this starting out. After you’ve done it successfully in your paper trading account, if you feel confident enough, then you can replicate it in a real money account.
Now, this instant cashflow transaction in a margin account would've meant that the broker would have set aside $646.90 in buying power for every put contract we sold. (I discuss margin accounts in detail in Module 2 of the quick start series.)
You don’t have to use margin, but if you do that’s important to understand and ask questions about.
This margin calculation is based on the broker's margin schedule, which is determined by the current expected range. This requirement could increase, which is why you’d want to have a cushion of cash in your account if you use margin on these trades. That helps you make sure you don’t get into trouble.
Now, if we wanted to use a cash-secured approach (cash-secured put-selling is also covered with JP in Module 2!) on this transaction, we would’ve used a cash account.
In that case, the broker would set aside $5,175 for every put sold.
This cash set aside is to make sure that if O share prices started dropping below the strike price by expiration, I would be able to take on the risk of buying back the stock instead of keeping my cash flow.
Let’s play out a few scenarios…
Ok, so, here’s how I am going to manage this cash flow position.
Best case: I’m going to be looking to buy-to-close the Realty Income Corp (O) December 23, 2023, $52.5 put option contract at a 50% profit or at $0.35 per contract. The reason is that we want to manage to keep our profits and reduce our market exposure. The stock market moves and we want to dance with it, not stand still. Once we lock in our profit, we can redeploy for another opportunity with more cash flow opportunity.
So, the best-case scenario… generate and keep instant cash flow.
Then rinse and repeat…
Worst case: We don’t have to worry about Realty Income Corp (O) going bankrupt, so the real risk is short-term market volatility that could push shares below our $51.75 (strike price – premium collected).
If that does happen in the short term, I'll buy-to-close this position and roll it out for more time while collecting more cash flow.
So, in other words, we would just need a little time for the market to go in our favor. This will take a little more buying power, and why we always want to keep 50% of our buying power available.
Next steps…
Ok, so this alert covered A LOT…
Read this multiple times… write down your questions as you go.
And then, submit them on this page in the question box. I’ll answer them in an upcoming Q&A podcast. Those podcasts are sent to you each week, and I’ll do my best to get to everyone’s specific questions.
Josh Belanger
Editor, Weekly Cashflow Triggers
