Mar. 19 at 9:22 PM
One REIT that’s been gaining serious attention lately is Agree Realty Corporation (
$ADC) – often called the "younger brother" of Realty Income (
$O).
Currently trading at
$76.80,
$ADC is up 7% in the last month and a massive 39.2% over the past year (not even counting its solid dividend yield). 📈💰
But is it still a buy? Let’s dive in. 🧵👇
1/ Why is
$ADC gaining popularity?
It's smaller than Realty Income but still a powerhouse, with an enterprise value that's only 1/7th of Realty Incomes
$O.
🔹
$O is so large that finding high-quality acquisitions is getting harder.
🔹
$ADC, being smaller, has more room to grow at a faster pace.
This is why some investors see
$ADC as the better long-term bet.
2/ Dividend Breakdown 💸
$ADC offers a ~4% dividend yield, though it was above 5% before the recent price surge.
✅ Pays monthly dividends (switched from quarterly in 2021)
✅ 5-year dividend CAGR: 5.7%
✅ 10-year dividend CAGR: 5.6%
That’s solid dividend growth for a REIT. 📈
3/ Strong Earnings Growth
$ADC’s Adjusted Funds From Operations (AFFO) per share grew 4.7% YoY – a key metric for REITs (like EPS for normal stocks).
For comparison:
📊
$ADC AFFO growth: +4.7%
📊
$NNN AFFO growth: +2.8%
It’s growing faster than its competitors.
4/ Smart Management Moves
What sets
$ADC apart is its strong management team:
🔹 Focused on e-commerce-resistant properties since 2010
🔹 Avoided struggling retail sectors (theaters, gyms, entertainment) before they collapsed
🔹 Reduced Walgreens exposure from 30% in 2012 to just 1% today – a smart move given WBA’s struggles
This kind of foresight is rare in the REIT world.
5/ High-Quality Tenants 🏢
68% of
$ADC’s tenants are investment grade vs. only 35% for Realty Income.
📌 Top tenants: Walmart, Tractor Supply, Dollar General, Lowe’s, Kroger, Dollar Tree.
📌 Top sectors: Grocery (9.2%), Home Improvement (9.2%), Auto Service (8.1%), Convenience Stores (7.5%).
This gives
$ADC more stability than many other REITs.
6/ Is
$ADC Overvalued?
Current price:
$76.80
Historical AFFO multiple: 18.14x
Current AFFO multiple: around 17.96x
While it’s trading at a premium (compared to many REITs), it's actually at one of its lower historical valuations in the last 6 years.
7/ Dividend Discount Model Valuation
🔹 Estimated intrinsic value:
$73.50
🔹 10% margin of safety price:
$61.30
👉 Key takeaway: Not a screaming buy (based on valuation), but if you’re bullish on its growth, it’s still reasonable at current levels.
8/ Final Thoughts
✅
$ADC is growing faster than
$O
✅ Strong tenant base & smart management
✅ Monthly dividend w/ 5.7% CAGR
✅ Slightly overvalued, but still a solid long-term play
Would you rather own Agree Realty (
$ADC) or Realty Income (
$O)?
