The variety of teaser ads which promise “free money” have been pretty popular over the years, and we’ve got a new one from Jason Williams that’s catching our readers’ attention… and is perhaps even more misleading than most… so let’s dig in.

Williams’ ad starts like this:

“Keep reading to discover how you can sign up for this stimulus program within the next five minutes — and receive your first payment….

“In April 2020, at the height of the pandemic, the U.S. paid out its first stimulus payments of $1,200.

“Eight months later, it paid out another round of payments, this time for $600.

“And then in March 2021, it sent out payments of an additional $1,800.

“But for a small group of Americans…

“These were NOT the last payments they would receive courtesy of the U.S. government.

“In fact, a handful of smart folks have continued to receive payments just like these every three months…

“Take Matt S., an avid golfer from New York. He’s collecting $5,470 each quarter.”

So the copywriter spins his magic — wait, you say, I’m an avid golfer, how can I get this money?

“Or Greg B., from Massachusetts, who loves taking his three kids boating on the weekends. He just cashed in a payment for $4,823.”

Hey, that sounds like a normal guy, too — maybe this is real!

OK, so don’t get your hopes up. It’s not really a “stipend” or “free money” or a “stimulus payment” that’s being teased here… but let’s check through the clues and see what, specifically, is being peddled. All of this misleading promising is intended to get you to subscribe to a newsletter called The Wealth Advisory ($79 first year, renews at ?), and the order form goes into a bit more detail about what Jason Williams is promising you in return…

“You’re now minutes away from collecting your FIRST ‘Stimulus Stipends’ payment for $7,882.

“And that’s just the start…

“A year from now, you’ll have collected $31,528….

“This lifelong, life-changing income is because of the smart move you’re about to make today — to collect your share of the $18.3 billion stockpile being paid out of the ‘Stimulus Stipends’ program….

“I simply can’t state this enough…

“You’re looking at a once-in-a-lifetime opportunity to collect FREE money each quarter — for life…

“ALL courtesy of the U.S. government….

“I’ve found a way to loop you in — with the Stimulus Stipends program.”

Hmmm, “free money,” can’t get much clearer than that, right? So what does the full ad tell us about how we’ll get this “free money?”

More explanation of this “secret” from the ad:

“For the longest time, this opportunity flew under the radar of mainstream media.

“But with paydays like these it’s no wonder the financial press is finally beginning to take notice…

“Forbes recently declared that you can ‘retire rich’ with ‘Stimulus Stipends’…

“Yahoo Finance reports they’re the fastest way to ‘retire early’…

“And Reuters has determined that Stimulus Stipends are so consistent and so substantial that they have become ‘the new gold’ in today’s economic environment…”

Those are awfully misleading, but we’ll come back to that in a minute.

And apparently this is some kind of secret thing that government employees aren’t allowed to access…

“If you’re a federal employee, 18 U.S.C. § 208 prevents you from participating in this Stimulus Stipends program.

“The reason why has everything to do with the source of these Stimulus Stipends.

“See, Stimulus Stipends were created by Congress to open up a new income opportunity for everyday Americans.”

And they go into more detail on that…

“You’d expect this to mean that only those working at the Treasury would be banned from participating — but you’d be wrong.

“Because the funds for Stimulus Stipends are derived from a different source…

“As I’ll show you in a moment, this source encompasses virtually every federal agency — from the FDA and FBI to the VA and the IRS.

“Which means the only way to remove these funds from the influence of federal employees had to be a total blanket ban.”

And then, the promise — how do you get this $7,882 payout? Williams makes it sound really simple…

“… if you’re not a federal employee?

“All you need is $15 and to follow the simple steps I’m going to lay out for you today.”

And gives more of those “regular guy” examples…

“Already this opportunity is providing life-changing money to everyday Americans just like you.

“Like Charlie D., a Seward, Nebraska, native. He and his wife were shocked to receive their first payment for $1,933.

“Then Eric M., from Arizona. He’s enjoying splitting a bottle of wine with his wife on the beach — now that he’s happily cashed in his payment for $2,743.

“And what about Thomas C., from Alabama? He’s busy taking his wife and three kids on vacation after he got a payment for $3,022.”

And the copywriter stokes this argument, making it sound more real, by referring to a “19-page memo” that “sparked the stimulus stipends program” — that’s just a reference to what’s really more of an HR memo from the White House about operational health and safety for federal employees, including how to manage return-to-office policies and adjustments for those thousands of workers. Williams read that memo very differently than I did, and he said this about it:

“The memo instructed each of these secretaries to execute the president’s plan to get the nation through this time of rising inflation, strained supply chains, and high rates of unemployment.

“Whether you agree with Joe Biden’s views or not, it doesn’t matter.

“All that matters is that for a few in-the-know Americans, this plan unlocked a lifetime of consistent payouts.

“Payouts — that for the time being — can still be collected by YOU.

“All it takes is $15 and five minutes of your time to get signed up.”

So where does this money come from, and why is it that you can collect it for “$15 and five minutes?” It gets a little convoluted, but here’s how they put it:

“Biden’s plan requires a LOT of new government employees to implement — which is the reason behind the new Stimulus Stipends program….

“The government is adding entire Super Bowl stadiums’ worth of employees to the federal workforce.”

And then we get closer to the real source of this “stimulus”….

“At the heart of Stimulus Stipends is the $18.3 billion Federal Buildings Fund…

“It was set up by the 92nd Congress in the early ’70s with one specific task — to pay for the government’s rent….

“All told, $18.3 billion will soon flow out of over 9,600 buildings scattered across key locations throughout the United States — and, ultimately, into the hands of everyday Americans.”

Wait, so why would government rent payments go into the hands of shleps like us who ponied up $15? Williams tries to draw that connection…

“Because it’s your tax dollars being used for this plan…

“Biden has found a little-known way to loop you in.

“See, Biden is working hand in hand with external partners to help house the incoming federal employees — and those partners are required by law to pay you.

“The external partners are providing the government buildings up and down America.

“Truthfully, very few people even know about these partners…

“So don’t expect the Bloombergs, Reuters, or Financial Times of the world to be talking about them.

“But the good news is these partners are required by Biden to pay you — in the form of Stimulus Stipends….

“A little-known law practically forces these partners to distribute 90% of the cash they receive — to YOU as Stimulus Stipends.”

OK, so we have to stop playing along here, it’s getting a bit ridiculous — there are not, of course, “free” stimulus payments that you get just because the government rents a lot of office space. Those rents are paid to the owners of the buildings, as is the case with all other lease agreements.

What Williams is trying to imply, without quite saying it, is that you get these payment just by becoming an “in the know” American and “supporting the government”, no matter how you vote…

“In return for everyday Americans like you supporting the government to increase the federal workforce — you get a consistent quarterly payment.

“And getting these payments couldn’t be any simpler.

“You don’t have to do any real work…

“You don’t check in on the properties…

“You don’t have to even know a thing about them…

“Instead, you simply sign up for these payments — in as little as five minutes…

“Then mark your calendar down every 90 days, because that’s when your Stimulus Stipends payments will roll in each quarter.”

But that’s as close as they get, that “supporting the government” bit, to revealing that these “stimulus stipends” are not something you just “sign up for” or “enroll in”, they are the ongoing payouts you get after making an investment to own part of those buildings. We’re on page 23 of a 37-page “presentation”, and this is the first time they even imply that you have to do anything other than spend $15 to get these “stimulus stipends.”

Which is super annoying and misleading, of course, but do they eventually spill the beans a little bit? Let’s keep reading…

Closing in on the end, this is how they refer to it again:

“I’m about to walk you through, step by step, how you can claim your payments starting today.

“Inside this report, you’ll get simple, step-by-step instructions…

“Spelled out in plain English…

“Taking as little as five minutes…

“Easily completed even if you’re no computer wiz.

“Which is all you need to sign up for the Stimulus Stipends program today…

“And start collecting your payments worth up to $7,882 — each quarter”

Which, not to spill the beans too fast here, is malarky — if you invest only $15, you’ll receive only about 27 cents per quarter.

The only real implication from Williams that this is an investment, not just a “stipend” that you sign up for, comes when he describes his success in making past recommendations for The Wealth Advisory…

“… nothing comes even close to the wins I deliver to my members month after month. We’ve even beaten the major indexes by as much as 1,096% in just the last year!

“When I crunch the numbers…

“That means a $1,000 investment into the Nasdaq — which increased 22.34% over the past year — would have netted you $1,204.70 today. That’s certainly a fair penny.

“But compared with The Wealth Advisory? Well, with that same $1,000 investment into the programs and strategies you’ll find in The Wealth Advisory — you’d be looking at $11,096.”

And even though that’s the first time he implies that you have to invest more than $15 to get these kinds of returns, that still sounds like a ridiculous claim — I would bet that whatever The Wealth Advisory is recommending as their “model portfolio” (or whatever they call their list of active recommendations), did not beat the Nasdaq 100 over the past year, and I would place a huge bet that their portfolio did not generate 1,096% returns in a year. Maybe they got clearance from the lawyers to say that because they placed one speculative bet that generated that kind of return, perhaps on an option position or something, or just because they used the “as much as” qualifier before that 1,096% number… but no, their portfolio of mostly dividend-paying stocks is not “beating the major indexes by 1,096%”. Most likely no portfolio is, not over any period of time that includes more than one hot (or lucky) speculative trade — and you would never, of course, invest a meaningful amount of money into something that’s speculative enough to return 1,000% in a year. That kind of potential short-term gain almost automatically comes with a high probability of a 100% loss.

But yes, it’s only by reading between the lines, late in this presentation, that you begin to realize that they’re talking about investments that generate a return for you, not about “free money”…

“Inside each issue, I’ll reveal a unique strategy the mainstream media likely aren’t even talking about… Something that the top 1% on Wall Street use to get uber-wealthy.

“In fact, each strategy could easily double — even TRIPLE — your money, within a few short weeks. Whether it be a government program, like Stimulus Stipends… a dividend-paying stock… or something else entirely. Either way, you’ll get a lucrative opportunity delivered each month.”

And it’s not until the last page or two that the terms “stock pick” or “stock recommendation” show up in the text at all.

Which, I’m sorry to have to tell you, is what’s being peddled as “Stimulus Stipends” — Williams is teasing that you can generate huge income by buying shares of Real Estate Income Trusts (REITs) which lease property to the government.

And that’s a reasonable investment strategy — but the returns are not likely to be in line with the daydreaming that Williams conjures up in the ad, about paying for fancy new vacations and easing your retirement. That’s because these are fairly mainstream investments, and they pay pretty mainstream income yields to shareholders.

So the big thing that does not come up at all in the ad, or on the order form, is the notion that your income from these kinds of investments would depend on the amount you invest. It’s an obvious thing, well-known by experienced investors, but if you’re new to this and get sucked into the story about ponying up $15 and getting your $7,000 stimulus in return, well, it’s bound to be very disappointing.

What, exactly, is being recommended by Jason Williams here?

The Thinkolator is almost certain that he’s recommending that you buy shares of Easterly Government Properties (DEA), a REIT which primarily leases space to federal government agencies, and therefore become a part owner of those properties, and you will receive dividends that are loosely tied to the tons of money the government spends to rent space for its employees and operations.

Sound familiar? Yes, we’ve seen other pitchmen similarly promise that you can get easy money by buying shares of government landlords — though the most popular of those promotions in the past was from Personal Finance, and happened to recommend shares of what was then called Government Properties Income Trust (GOV), which struggled to make its dividend payments and was a pretty weak performer for a long time, then merged with another REIT and became Office Properties Income Trust (OPI), which has been a terrible business, and might just be the worst REIT you could have possibly owned over the past decade (well, other than the ones which actually went bankrupt, at least). That one was bad enough to be a Turkey of the Year finalist a few times during the years that Personal Finance kept teasing it.

I don’t want to imply that Easterly Properties is anywhere near as bad as GOV or OPI was, it very likely is much better-managed than OPI, and, unlike that disastrous REIT, DEA has held up reasonably well during the pandemic and the rising interest rate pressure that has hurt most office REITs… I just want to note that leasing offices to the government has not been a sure path to riches for shareholders in the past.

Here’s the total return from Easterly over the past five years, compared to Office Properties Income Trust, since those are two of the only REITs which primarily focus on government tenants (OK, fine, we’ll also throw in Postal Realty Trust (PSTL), which owns, you guessed it, post offices, and has done much better than the office landlords of late… and COPT Defense Properties (CDP), which owns mostly DC-region office buildings leased either to the government, primarily used by defense or intelligence agencies, or to military contractors, which has also done relatively well) — and yes, these total returns include the dividends those REITs have paid to shareholders (that’s the S&P 500 in orange and the Vanguard Real Estate ETF (VNQ) in brown, just for some context):

For what it’s worth, PSTL yields about 6% these days and has also kept the same dividend for a couple years now, after mild growth before that… and CDP yields about 4%, with token dividend increases recently but no history of growth.

So what’s the story with Easterly Government Properties these days? Well, it started out as a private equity fund, more than a decade ago, and went public in 2015 as a REIT, after which it started paying out regular dividends to shareholders. They have never cut the dividend, unlike many REITs who had to slash their payouts in 2020, or as the office market fell apart in more recent years, but they also haven’t grown it very much — it was 25 cents per quarter back in 2017, and today it is 27 cents per quarter, per share, a level it’s been stuck at for three years (it would have had to rise to 32 cents to keep up with inflation over the past seven years, just FYI). The stock price is at about $13.40 right now, so that $1.08 per year in dividends provides a shareholder yield of 8% at the moment, assuming that they continue to pay out the same steady dividend.

That’s actually relatively appealing, for a steady REIT — the dividend yields on REITs have all climbed to meet the higher interest rates, which means their share prices have fallen (they can’t really grow their income very fast, so if investors insist on a higher yield, to compete with 5% T Bills, that means the stock price has to go down), but 8% is still relatively high in a world where the Vanguard Real Estate ETF (VNQ) pays 4% (the REIT ETFs have relatively low yields because they’re dominated by the huge REITs that people think of as safer and that still trade at relatively low yields, like American Tower (AMT), Prologis (PLD) and Equinix (EQIX).

There are more than 500 US-listed REITs, but most of them have had at least some trouble through COVID and its aftermath — of the 80 US REITs which have at least kept their dividend payments steady over the past five years, with no real cuts, (some have been flat, some have kept raising the dividend), there are only about a dozen which provide a yield above 8% right now — and most of them are either in some trouble because they’re sinking in too much debt, and have little capacity to grow, or are primarily mortgage REITs (a different kind of REIT entirely, one that invests in portfolios of mortgages instead of owning actual buildings — mortgage REITs are much more directly influenced by shifting interest rates).

To be clear, Easterly Government Properties has not been a good investment over the past five years — if you bought before COVID, you would have lost roughly 2% per year on your investment. But it is, at least, a survivor, and that’s probably an above-average return for an office-heavy REIT during that time period, if only because the government doesn’t default on leases or stop paying rent just because people stop coming to the office. And they do not specialize in the most-likely-to-be abandoned generic government office buildings, like the DC headquarters of various agencies… they specialize more in the buildings that are mission critical to government work around the country, with their biggest portfolio concentration (about 25%) being in Veterans Administration outpatient facilities and hospitals. They’ve still got 97.5% occupancy, they say, which would make any office landlord jealous these days, and they believe the properties are actually in steady use, not that the government is just wasting rent on unused offices (they say the electricity usage in their buildings is relatively steady from pre-COVID through now, indicating that actual humans in place doing work). I haven’t read the filings or looked for skeletons in the closet, to be clear, those tidbits are from their most recent Investor Presentation.

So Easterly faces many of the challenges that other REITs are dealing with, largely revolving around their cost of capital (rising with higher rates), and the fact that their shares have to compete with other income investments. They are a victim of rising interest rates which pinch their cash flow margins, to some degree, so it’s possible they’ll get some relief if interest rates really fall over the next year.

But they do not, at least, seem to face the challenge that most office landlords are dealing with right now on top of that interest rate risk: unexpected new vacancies, unwanted properties that are worth much less because they are empty and no longer generate positive cash flow, and potentially having to default on commercial mortgages and return those properties to the bank. There’s often a threat that the government will cut back on office space, or become more efficient in using the properties it already owns (and are often in disrepair) instead of leasing office space from other landlords… but from what I can tell, the government has never really followed through on that threat.

As long as Easterly continues to have high occupancy rates, and continues to collect rent from the government, they should be able to get through this interest rate and ‘work from home’ shock without a complete collapse, and maybe even without having to cut the dividend, and things look relatively decent on that front… but that doesn’t mean they’re dancing in the sunshine or about to grow like crazy. It’s still an environment where growth is tough to come by, and if you’re not growing at all, and rates remain fairly high, it’s hard for most REITs to keep up.

What does one have to do to get a $7,882 dividend (sorry, “Stimulus Stipend”) from Easterly each quarter? Well, each share currently spits out a 27 cent dividend each quarter, (we missed the August payment, that was paid a couple weeks ago, but they should declare a similar dividend at the end of October, to be paid out in November). What would it take for that November payout to lead to a $7,882 check in your mailbox? Well, if we assume that the next dividend is also 27 cents per share, the same amount they’ve paid each quarter since August of 2021, then you’d need to own 29,193 shares. At today’s price, roughly $13.40 per share, that would mean you’d have to invest a little over $390,000 to get a quarterly dividend of $7,882.

And yes, I’m sure many Gumshoe readers could swing an investment of $390,000 into REIT shares… but I’m also sure that for those people, ~$30,000 in annual dividend income would not be a “life changing” windfall. Everything is relative.

So it’s more of the same from The Wealth Advisory and Jason Williams, I’m afraid… we’ve seen similarly misleading ads about how easy it is to get “life-changing income” from him for years.

And he even brags about them, to some degree — he backs his pitch up in part by claiming to have discovered the “Prime Profits” program that let people cash in tens of thousands of dollars because the government was accusing Amazon of being anti-competitive and “created the program to help everyday Americans.” He and his predecessor at The Wealth Advisory, Briton Ryle, ran that “Prime Profit” ad for years, pitching shares of Prologis (PLD), the largest warehouse-owning REIT, as a way to scalp some of the money that Amazon pays in rent. That was sort of true, if you squint a little funny at their numbers… but the ad also promised you could make $48,000 in annual income from those “Prime Profits,” and that level of income would have required an up-front investment of about $2 million at the time the ad started running.

Which means it was entirely misleading… but in this case, it would have also worked out OK as long as you didn’t really expect the $48,000 in income — Prologis has done well, getting a big boost from the pandemic and from buying out one of their larger rivals, and if you bought back in the Fall of 2018 when they ran that “Prime Profits” pitch the first time, you would have roughly kept up with the S&P 500, and done quite a bit better than the average real estate investment.

And similarly, he says he “unearthed ‘Netflix Royalties'”, which also provided big income to investors — and that was a pitch, which started back in May of 2017, for one of the data center REITs, Coresite (COR). COR was later acquired by American Tower (AMT) for cash, a few years back when all the smaller data center REITs were being bought up… so that investment also did pretty well for a while, but it’s hard to benchmark it, not knowing what you might have done with the cash from that buyout — if you had instead bought one of the surviving data center REITs at the time, which would mean either Digital Realty Trust (DLR) or Equinix (EQIX), your returns would have been OK — not as good as the broader market, not as bad as the average real estate investment.

So that can stand as a reminder: Just because the ad is terribly misleading, and promises much more extravagant income than a typical investor is likely to earn from these REITs… that doesn’t necessarily mean the investment itself is a terrible idea.

And it’s not just those two — many income pitches from The Wealth Advisory in recent years have mined a similar vein, wildly exaggerating the potential income most investors might earn from these investments — including his “AI Tollbooth” pitch (a tease of Digital Realty), the similar-sounding “5G Tollbooth” (teasing Uniti, which leases fiber optic networks to Windstream), and “Plug-in payouts” to profit from owning land where EV charging stations are placed (teasing a bunch of retail property REITs). Those ideas have mostly been trailing the market over the past few years as they’ve been teased, though, to be fair, that’s mostly because they were teased before interest rates started rising, which hurt almost all REITs.

The best Real Estate Investment Trusts have indeed been useful investments for building wealth over time, often even offering some inflation protection, even though the sector is pretty beaten down over the past two years because of rising interest rates. That said, there is some risk that our fondness for REITs is really mostly driven by a good performance history that happened to mostly coincide with falling interest rates, since REITs really only got popular and pretty widespread in the 1980s, just as interest rates were gradually beginning their 40-year decline that ended, with a thud, in 2022.

That falling rate environment meant that these kinds of investments got way too richly valued going into the COVID shock, back when money was all-but free and these landlords could easily get 4% mortgages on their properties, and back when investors were happy with sometimes just a 2-3% yield from a solid REIT. The world has now reset pretty dramatically, but perhaps that means we’ve again got a chance, with lower valuations and higher dividend yields, to get decent returns from REITs again in the future… but a lot of that will depend, of course, on what the general path of interest rates is from here — the widespread consensus is that rates will fall for the next year or so, as the Fed claims victory over inflation and cuts short-term rates, but we certainly don’t know whether the general trend will be up or down over the next decade.

As for Easterly itself, well, I can see the appeal of DEA relative to the shares of many of the sector-specific REITs — it’s good to know that your tenant will always pay their rent, and that their 15+ year leases will be honored, and the dividend yield is relatively high.  That doesn’t mean it will be a great investment, for that we’d have to have some soothsaying ability when it comes to what the rate will be on the 10-year Note in five years, and what kinds of dividends investors are demanding from REITs at that time… but it’s at least safer and more appealing than some.

Sound like your kind of income investment? Prefer other ways to get a near-8% yield from other places? Think we’ll see longer-term rates fall enough to make all REITs and similar income investments outperform again, or is there another wave of pain to come? Let us know with a comment below.

P.S. I told you I’d loop back to those somewhat misleading quotes from other publications, if only because they imply that this is hot new news about the current trend… that Forbes quote about “‘retire rich’ with ‘Stimulus Stipends'” is from a column Brad Thomas wrote, titled “Retire Rich with REITs”, in the Fall of 2019. In case you’re curious, that ad referenced Thomas’ “strong buys” on Tanger (SKT), Simon Property Group (SPG), Iron Mountain (IRM), Plymouth Industrial REIT (PLYM) and (now former REIT) CoreCivic (CXW). Those have been above-average REITs over the past five years, and a couple of them (IRM and SKT) have beaten the S&P 500. (Brad Thomas is now a full-fledged newsletter guy, too, his Wide Moat Research letters are published by Marketwise (MKTW) and we cover his teaser ads from time to time — including, coincidentally enough, a “Amazon Royalties” pitch for Prologis last year that was very similar to The Wealth Advisory’s “Prime Profits” pitch).

And that Reuters quote about how they’ve become ‘the new gold’ in today’s economic environment” seems to be a reference to the article, “To Hedge Inflation, Property Trusts are the New Gold” (from May of 2013), about how property trusts in Asia were getting popular as a way to fight inflation. In general, the REITs in Singapore, Japan and elsewhere in Asia did have a nice run from 2010 into the pandemic, though, like US REITs, the average REIT overseas has also performed poorly over the past five years.