[jandrewrogers]

Realty Income is higher risk and lower return net of taxes right now than e.g. some US treasury tracking ETFs. As an example, the effective yield on BOXX is only 0.25% lower than O, and can be recognized as long-term capital gains.

For a company like Costco with high revenue growth and a very low price/sales ratio, earnings are a fairly meaningless number for valuing the company and experienced investors know this. You have to finance growth with earnings and if they stopped investing in growth it would boost earnings at the new (higher) equilibrium. Investors take the long view.

[adam_arthur]

I'm a fan of bonds too, though think yields will go a bit higher from here.

A 12x AFFO multiple is not lower return than a 5% yielding (20x multiple) US treasury bond though. The treasury bond coupon is safer, but more exposed to inflation risks.

I'm not sure what BOXX is, but a quick look showed they hold options against SPY, so sounds like an options selling strategy for income. These work alright too, though your income will grow/decline along with the price of the underlying.

And you should check again revenue growth for COST or a stock like AAPL, which is projected to have -5% revenue growth over the year.

A 50x earnings multiple implies 2% yield today. Even if Costco doubles their revenue, at the same margins their earnings yield would only be 4%. So say they grow it 3x, they now have an earnings yield of 6%.

So in 15-20 years when they've 3x their revenue, you're entitled to a 6% yield on your original investment at 100% payout ratio.

To be a remotely good investment on a fundamental basis, they must either carry a lower multiple, or expand their margins over time. Given that Costco's whole premise is being a discount retailer, expanding margins is unlikely.

Please don't participate in an investing conversation if you don't have anything data driven to contribute.