One of the benefits of owning a real estate investment trust (REIT) is that the business model is fairly easy to understand and is capable of generating income. Usually, these investments do not come cheap as income investors tend to buy into these instruments for the monthly or quarterly dividends they provide, often becoming a cornerstone for dividend investing strategies.
One such REIT is Realty Income (NYSE: O), which has seen steady growth with its vast portfolio of high-quality assets in recent years. On June 14, the company announced that they’re increasing their dividend by 0.2% to a total of $0.2475 per share each month. With the increase, the forward yield now stands at 4.73%, and the first one is payable on July 15 for shareholders of record on July 1.
Further, this increase represents the 99 consecutive quarterly dividend increase and a total of 116 dividend increases in total. The dividends have been growing since the company was listed on the NYSE in 1994, at an annual compound rate of 4.4%.
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O chart and analysis
Meanwhile, the shares of the company are trading below all daily Simple Moving Averages (SMAs), bouncing off of October 2021 support line at around $62. Since no trading volume increases have been noted, it could be expected that the shares keep moving sideways in a choppy market.
On the other hand, analysts on Wall Street rate the shares a strong buy, predicting that the average next 12 months price could reach $75.17, which is 17.14% higher than the current trading price of $64.17.
Forward sales
Furthermore, the company entered into a forward sale agreement with 19 financial companies to sell up to 120 million shares of its common stock. This agreement allows the company to agree on a new settlement date in the future and to lock in the future price at which it can sell the shares to the forward purchaser.
If physically settled, all of these forward sales would provide the company with cash, but only if Realty Income elects to cash settle or net settle its obligations. With the proceeds, Realty plans to pay off debt or acquire more properties to improve its property portfolio further.
It seems as if the company is poised for further growth while providing its shareholders with steady and secure monthly dividends.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
