Investors love to watch and analyze the big moves that Warren Buffett makes with Berkshire Hathaway. Sometimes, however, the transactions that occur with Buffett's investment vehicles aren't headline-grabbing events. While a small decrease in the company's investment in Bank of America has made huge headlines this year, there was much less fanfare when it bought out Pilot Travel Centers earlier in 2024.
A multistep transaction for Berkshire Hathaway
Pilot Travel Centers operates a chain of largely highway-based truck stops. They sell gas and other convenience items. There are around 650 travel centers and about 75 fuel-only locations across 44 U.S. states and five Canadian provinces.
The company's travel centers use the names Pilot and Flying J. It also operates a wholesale fuel and fuel marketing businesses in the United States. Berkshire Hathaway includes the company within its energy division.
Image source: Getty Images.
This wasn't a one-shot transaction. Warren Buffett's Berkshire Hathaway bought 38.6% of Pilot in 2017 and followed up with another 41.4% in early 2023. Then it bought the remaining 20% of the company that it didn't already own in January 2024. At that point, Pilot became a wholly owned subsidiary of Berkshire Hathaway.
Now, the only way you can get exposure to Pilot is to buy Berkshire Hathaway stock. But if you are a dividend lover, you can own something similar if you purchase real estate investment trust (REIT) Getty Realty (GTY 1.05%).
Getty is similar enough to make it worth a look
Getty Realty isn't the same type of business as Pilot, but it's more like comparing two varieties of apples than comparing apples to oranges. While Pilot owns truck stops, Getty Realty owns gas stations and convenience stores. At this point, the REIT's portfolio includes more than 1,100 properties across 42 U.S. states.
The bigger draw, however, will likely be Getty's generous 5.7% dividend yield. The dividend has been increased annually for 12 consecutive years, as well. The annualized increase over the past decade was around 8%, though more recent hikes have been roughly half that level. Still, 4% a year is enough to increase the buying power of the dividend over time.
Although gas stations and convenience stores are Getty's core property type, it has been expanding into other areas. For example, in the second quarter, it bought 20 car washes and three quick-serve restaurants, in addition to 16 auto-service centers and two convenience stores. Occupancy was a very strong 99.7%, and Getty collected 100% of its rents, so it has a solid portfolio of assets and tenants.
The funds from operations (FFO) payout ratio is a bit high at approximately 78%, but that isn't outlandish. And it's worth noting that Getty was able to increase FFO about 3.5% year over year in the second quarter, hinting that slow and steady growth will likely allow for more dividend increases in the future.
Just because Getty Reality is a REIT, investors shouldn't think that the company is going to be a high-growth stock. The dividend yield will likely make up the bulk of the return. But if Warren Buffett is willing to effectively bet on gas stations, you can do the same thing with Getty Realty.
Don't follow Buffett blindly
There's one big caveat here. You shouldn't just do whatever some other investor does, no matter how famous they are. You have to do your own homework and decide if an investment idea makes sense for you and your personal style of investing. But if you're a dividend investor, Buffett's buy of Pilot could probably still lead you to do a deep dive into Getty Realty's similarly focused business.
