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Yielding success: The dividend darling REIT investors love

Yielding success: The dividend darling REIT investors love
Bogdan Stojkov

Investors seeking steady income often turn to real estate investment trusts (REITs), and among them, one stands out for its consistency and success. We’re, of course, talking about Realty Income Corporation (NYSE: O), a REIT that’s been a reliable source of dividends, consistently rewarding its investors over the years.

What is Realty Income?

Real estate investment trusts (REITs) are companies that own, operate, or finance income-generating real estate assets and distribute the majority of their income to shareholders in the form of dividends.

Founded in 1969, Realty Income is a leading REIT renowned for its stability and consistent income generation. Specializing in owning and leasing freestanding commercial properties across various sectors, Realty Income’s focus on net-lease agreements provides a predictable income stream.

Realty Income’s diverse portfolio of high-quality properties, coupled with long-term leases with reputable tenants, contributes to its resilience through economic cycles. And with a conservative dividend payout ratio and strong balance sheet, it prioritizes prudent financial management, ensuring the sustainability of its dividend payments.

Realty Income stock price today

At the time of writing, Realty Income stock price stands at $52.31, reflecting a notable decline of $0.18 or 0.34% year-to-date.

Realty Income stock dividend history

Since its public debut in 1994, Realty Income has been a reliable source of income for investors. Realty Income’s stock dividend track record is impressive, having delivered 643 consecutive monthly dividend payments without fail. What’s more, it has consistently increased its dividend payment, achieving this feat 123 times, including an impressive streak of 105 consecutive quarters. Such consistent growth has resulted in a compound annual rate of 4.3% for its payout—a figure that brings comfort to investors seeking stable returns.

Realty Income dividend history. Source:

Sustainable growth and attractive yields

While Realty Income has a strong history of dividend growth, it remains focused on the future. Currently boasting a dividend yield of 5.88%, the REIT aims to sustain this attractive payout while also targeting growth in its adjusted funds from operations (FFO) by 4% to 5% per share over the long term.

Financial management

One of the key factors contributing to Realty Income’s success is its prudent financial management. With a conservative dividend payout ratio—just 75.1% of its adjusted FFO in the third quarter—and a solid balance sheet, the company is in a solid position to maintain and even increase its dividend in the future.

This financial stability provides peace of mind to investors, knowing that their dividends have support from a strong and sustainable financial foundation.

Expanding revenue stream

Realty Income’s growth strategy extends beyond organic growth to include strategic acquisitions. The REIT has wasted no time in expanding its portfolio through targeted acquisitions, further bolstering its revenue streams.

This year alone, Realty Income completed two notable deals, demonstrating its commitment to growth and value creation for shareholders.

The first of these acquisitions was the purchase of fellow REIT Spirit Realty in a $9.3 billion transaction this January. This strategic move is expected to boost Realty Income’s adjusted FFO by more than 2.5% per share, further enhancing its ability to deliver sustainable dividends to investors.

Additionally, Realty Income recently acquired a portfolio of retail properties from Decathlon for over $570 million (approx. €527 million), further diversifying its asset base and strengthening its position in the market.

Looking ahead: What is the forecast for Realty Income?

As Realty Income continues to execute its growth strategy and maintain its track record of dividend consistency, the future looks bright for both the REIT and its investors.

With a proven history of delivering reliable income streams and a clear vision for sustained growth, Realty Income remains a favorite among income-focused investors seeking stability in uncertain times.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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