For many other teenagers, it was a chore… But for me, it was like landing a job at NASA.

“Thank you, come again!” I repeated my one-liner with a big grin and far more enthusiasm than my customers expected. I’m sure I entertained quite a few shoppers back in the day.

I was a “courtesy clerk” at our local Family Mart in high school. And that was just the start of my long professional connection with grocery stores.

Now, while I don’t have the same pep in my step walking into a grocery store decades later, you might be surprised to hear that their significance to my career has actually increased over time.

Rather than collecting a paycheck for standing on my feet and greeting customers all day… Now, I make safe income from grocery stores without having to lift a finger.

At Intelligent Income Daily, our goal is to help you find the best, most reliable income opportunities in all market conditions.

And today, I’m going to share with you one company that will deliver the revenue-generating force of one of the country’s most successful grocery stores to your portfolio.

Grocery Stores Have Stood the Test of Time

Most people shop for groceries once or twice a week. And according to a study by the U.S. Department of Agriculture, an average trip to the grocery store takes around 45 minutes.

When I became a real estate developer after college, this fact made grocery stores the prime target for my shopping centers.

You see, grocery stores are what we call “anchor tenants.” They’re the big names that bring in a lot of shoppers consistently. The smaller stores around an anchor benefit from the increased traffic because they’re conveniently located next to an anchor that most people are going to.

To attract an anchor tenant, a shopping center often has to make concessions like lower rent and modifying the building to certain specifications. But it’s more than worth it. Strong anchor tenants make a shopping center more attractive and increase the rental value of the smaller stores.

During my career, I’ve built grocery stores for Ingles Markets and Ahold Delhaize, which owns chains like Food Lion and Stop & Shop. These stores were great for bringing in crowds. But there’s one grocery store I’m still hoping to get my hands on…

One day, I hope to get a chance to build a Whole Foods.

Why Whole Foods? Because it’s one of the pickiest grocers when it comes to opening new stores. And I like a challenge.

Whole Foods has a proprietary algorithm that looks at a ton of data to find the best locations.

While most grocers are happy to plop down a store based on local population within a five-minute drive, Whole Foods targets more affluent shoppers. It looks to draw in customers from as far as 20 minutes away. Typically, these are college-educated and high-income folks who seek out specialized produce and products they can’t get at regular stores.

That strategy has worked out for Whole Foods so far, and it’s developed into the leading brand for natural and organic groceries.

Amazon (which owns Whole Foods) has been putting more focus on its brick and mortar stores lately, opening dozens of Whole Foods and Amazon Fresh stores in the past year. The company’s physical store sales increased by 10% according to its latest report.

While many people think online shopping is the way of the future, it seems physical retail is making a comeback, particularly in grocery shopping.

According to Brick Meets Click, online grocery sales have mostly flat lined and may even be slightly declining since the initial surge brought on by the pandemic.

The trend may be due to a combination of COVID fears receding and shoppers trying to save money on delivery fees.

Whatever the cause may be, Amazon sees the opportunity to increase its grocery business and is investing in new stores, more product offerings, a better supply chain, and new technology. That should translate to more growth and better profits for Whole Foods.

You may think that buying Amazon would help you benefit from Whole Foods’ growth. But Whole Foods represents less than 4% of Amazon’s sales. So that’s not a great way to play the trend.

Though you can’t invest in Whole Foods directly, there is another way to profit…

Remember how grocery stores are anchor tenants for shopping centers? As physical retail makes a comeback, there will be higher demand for and more traffic at these properties.

And one shopping center real estate investment trust (REIT) will be poised to profit with better tenants and higher rents.

Anchor Your Portfolio

Given how selective Whole Foods is with its locations, it’s a logical conclusion that a REIT with more Whole Foods stores will likely have the best, most desirable properties.

Brixmor Property Group (BRX) is a shopping center REIT that’s one of the largest open-air retail landlords in the U.S. It has a nationally diversified portfolio of 378 shopping centers. Around 70% of its shopping centers are grocery anchored. And Whole Foods is its 9th largest tenant.

Shares are trading at a sound value with a price to funds-from-operations (P/FFO) multiple of 11.5x and dividend yield of 4.6%. The dividend is well-covered at a 51% payout ratio based on 2023 FFO estimates, which means it’ll likely see future increases.

So to get exposure to the continued growth of physical grocery stores – and Whole Foods, one of the strongest contenders in that sector – consider adding BRX to your portfolio.

Happy SWAN investing,

Brad Thomas
Editor, Intelligent Income Daily

Sponsored Link: Whole Foods isn’t the only “anchor” business we monitor. Our Wide Moat Research team doesn’t waste time getting caught up in the latest shiny investing trend. We choose the best companies so that you can sleep well at night (SWAN). And sometimes, the best picks are hiding in plain sight.

So if you’re interested in this kind of research and want to see the anchors in our Intelligent Income Investor portfolio, click here.

Source: Wide Moat Research