Earnings Drive Long-Term Returns but Emotions Create Short-Term Opportunities for REITs Like Mid-America and Realty Income

Earnings determine a company's stock price over the long run, while emotions impact price in the short run. Understanding this dichotomy can lead to better investing decisions.

For REITs, FFO and AFFO are better earnings metrics than EPS, as they account for non-cash expenses like depreciation. AFFO is a normalized cash flow measure.

Mid-America Apartments (MAA) and Realty Income (O) have long histories of predictable, growing AFFO enabling steady dividend growth.

Both MAA and O look attractively valued now based on current AFFO multiples and high dividend yields, presenting a margin of safety.

Consistent earners like MAA and O can provide 20%+ annual returns through an intelligently timed purchase at an emotionally-driven low price.