Realty generates monthly dividends for both its common and preferred shares by leasing space to retail chains across the U.S., with a focus on the southeastern states. Tenants include restaurants, convenience stores, childcare facilities, and automotive repair shops. Realty buys the property from retail chains then leases it back to them under long-term 15 or 20-year contracts, providing a steady income stream.

Dividend:  The preferred shares pay a dividend of $1.844 per share annually, giving them a yield of 7.4%. The payment is doled out in monthly installments and is cumulative, meaning eventually you should get any dividends that are suspended if the company hits a cash crunch and then recovers.

And these payments should be secure, with an investment-grade rating of "Baa3" from Moody's and "BBB-" from Standard & Poor's. Although these preferreds are traditional equity, dividends from preferred shares issued by REITs are taxable as ordinary income. Shareholder information can be reached at 1-877-218-2434.

Performance:  As you would expect from the company's long-term contracts, earnings have remained at a consistent level for years. The company does get some upside from rental increases built into the contracts and from buying and selling properties.

Expected earnings of around $197 million this year should be more than ample to cover the $74 million in dividend payments on all the company's outstanding preferred share issues. Realty's balance sheet is also strong, with debt accounting for less than half of the firm's total capitalization.

Outlook/Valuation:  Despite the company's stable earnings profile, the common and preferred shares have been weighed down by concerns that trusts like Realty will have a hard time financing future growth in today's tight credit markets. Further, inflationary pressures could erode the value of the company's long-term contracts. Still, the company has proven its ability to weather difficult economic cycles over its 39-year history.

Although they have no maturity date, the shares can be called on or after May 27, 2009. If called, you would get back the par value of $25 per share. Realty's preferred shares offer a conservative investor secure monthly income with the potential for capital gains.

Good investing!

Carla Pasternak
Editor
High-Yield Investing

About High-Yield Investing

High-Yield Investing is a monthly investment newsletter that brings you a wealth of information on the market's leading income stocks and funds, as well as a host of relatively unknown investment options that you probably won't find coverage of anywhere else. Many of these securities provide investors with annual dividend yields of 10%, 15%, even 20% or more. The newsletter not only provides subscribers with investing ideas that produce incredibly high dividend yields, but the kicker is that these high-yield investments have also consistently outperformed the major market averages. (Learn More)

About Carla Pasternak

Editor of StreetAuthority.com's High-Yield Investing newsletter since its inception in May 2004, Carla Pasternak draws on a variety of financial backgrounds to make profitable calls on income-generating stocks for her readers.

Carla has been employed in the investment industry for more than two decades. In addition to her work as a writer for several nationally recognized financial publishers, her previous experience includes a position as president of a well-respected investor relations firm. She has also been writing shareholder reports for public companies since 1980.

A highly successful investment analyst, Carla specializes in high-yield, income-paying stocks. In that pursuit, she's always mindful to select companies that not only pay rich dividends, but that also deliver strong long-term capital gains. Furthermore, Carla's experience in writing SEC filings gives her the added insight required for her to truly understand a company's current and future financial health.

On the educational front, Carla holds BA, MA, MBA and Ph.D. degrees. When she's not watching the market, she's teaching business courses at the college level and managing millions of dollars in portfolio assets.

To learn more about Carla Pasternak's premium income investing newsletter -- High-Yield Investing -- please visit this link.