Companies with a history of consistently paying a reliable dividend and increasing it, even in bear markets, are worth your attention.
One dividend-paying investment is a virtual no-brainer — Realty Income (O). This real estate investment trust (REIT) holds an impressive portfolio of single-tenant properties.
Plus, it’s known as The Monthly Dividend Company, and recently declared its 628 consecutive common stock monthly dividend. The yield is currently around 5.1%, making it an appetizing choice for anyone seeking a dependable dividend stock.
A closer look at Realty Income
Realty Income was founded in 1969 and has since become a Dividend Aristocrat.
As a REIT, Realty Income is obligated to pay out no less than 90% of its taxable earnings as shareholder dividends. Since becoming a publicly traded company 28 years ago, it has increased its dividend 117 times.
Here’s how Realty Income does it.
Realty Income has more than 11,000 commercial properties in its portfolio, which it leases to over 1,100 clients. Of the dozens of industries Realty Income is involved in, many are recession-resistant. The REIT’s highest concentration of renters is within dollar stores, convenience stores, and grocery stores. Even during tough economic times, consumers continue shopping at these locations.
Some top clients in Realty Income’s portfolio include Walgreens, Dollar General, 7-Eleven, Dollar Tree, Sainsbury’s, Wal-Mart, and Home Depot. These clients have allowed Realty Income to maintain a high occupancy ratio for decades.
Dependable returns and sustainable growth
There’s plenty to like about Realty Income financials. In its most recent quarterly earnings report, the company generated revenues of $803 million, up from $463 million in the same quarter a year ago.
Forecasts are strong in spite of a weaker economy too, with the following top line revenues expected:
- 2022: $3.1B
- 2023: $3.5B
- 2024: $4.1B
Management stated in its most recent annual report, “In 2021, our portfolio continued to generate strong, reliable cash flows to support our increasing monthly dividends and strategic growth initiatives.”
The REIT brought in $2.9 billion from annualized rent, supporting ongoing growth initiatives. This growth has been apparent for decades, rewarding investors along the way. For example, data shows a significant difference when comparing a $100 investment in Realty Income to major stock indices.
From 1994 to 2021, an initial $100 in Realty Income would have grown to $4,097.50, compared to $1,737 for the S&P 500. Investors have also enjoyed a 4.5% dividend per share growth rate since 1994.
Realty Income has one of the highest credit ratings in the REIT sector. This rating allows it to keep buying properties that contribute to growing income. The top brass are clear on the firm’s sustainable growth strategy. It plans to:
- move into new geographies,
- focus on new industries, and
- leverage the power of predictive analytics technology to drive more informed business decisions.
The Bottom Line
Realty Income has all the hallmarks of a dividend stock and should provide investors with stable, monthly passive income — but how you use those dividend payouts matters long-term. Dividend reinvestment allows you to supercharge your returns over time, thanks to the effects of compounding.
So what’s the bottom line?
Realty Income has a market cap of over $36 billion and a solid history. Considering shares are currently hovering just above the stock’s 52-week low, fair value sits at $71 per share according to consensus analysts’ expectations, now is an opportune time to buy.
Realty Income stands out for its steadily rising monthly payouts and remarkable track record. So, if your goal is to find smart dividend investments that will help your money grow over the years and decades, Realty Income is a compelling choice.