Net Lease REITs: Diversification Or Diworsification?

Brad Thomas Investing Group Follow Summary Essential Properties Realty Trust offers a compelling blend of diversification, income, safety, and growth, with its largest tenant at just 3.1% of base rent. Diversification reduces tenant-specific risk, but quality of tenants, lease coverage, and disciplined capital allocation are critical for durable, repeatable AFFO-per-share growth. Concentrated REITs like PSTL or GLPI may deliver higher yields and faster growth but carry materially higher risk premiums due to tenant or sector concentration. I favor EPRT's 4.5% yield, conservative 63% AFFO payout, and broad tenant base as the optimal risk-adjusted approach for SWAN investing. Looking for a helping hand in the market? Members of iREIT®+HOYA Capital get exclusive ideas and guidance to navigate any climate. Learn More » petrenkod/iStock via Getty Images Legendary Fidelity fund manager Peter Lynch popularized the term "diworsification " in his 1989 investment classic, One Up on Wall Street . He used the expression to describe companies that expand into unrelated businesses due to diversification, only to weaken their competitive advantages, dilute This article was written by Brad Thomas 119.74K Followers Follow Brad Thomas has over 30 years of real estate investing experience and has acquired, developed, or brokered over $1B in commercial real estate transactions. He has been featured in Barron's, Bloomberg, Fox Business, and many other media outlets. He's the author of four books, including the latest, REITs For Dummies. Brad, along with HOYA Capital, lead the investing group iREIT®+HOYA Capital. The service covers REITs, BDCs, MLPs, Preferreds, and other income-oriented alternatives. The team of analysts has a combined 100+ years of experience and includes a former hedge fund manager, due diligence officer, portfolio manager, PhD, military veteran, and advisor to a former U.S. President. Note: Brad is also related to Nicholas Thomas who contributes to Seeking Alpha. Learn more Analyst’s Disclosure: I/we have a beneficial long position in the shares of O, ADC, EPRT, VICI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.