Realty Income Stock | An Investment for the Future?

realty income stock

If you want to invest in real estate but lack the time, knowledge, or desire to learn, Realty Income may be just up your alley. Realty Income’s dividend history, property expansion, and dividend growth rate just might make this company a good long-term prospect.

Realty Income is a REIT, or Real Estate Investment Trust, meaning they have to follow strict guidelines to be on the stock market. They have to:

  • Have at least 75% of its total assets invested in real estate
  • Structured as a corporation, trust, or association
  • Managed by a board of directors or trustees
  • Pay dividends of at least 90% of the REIT’s taxable income
  • Have transferable shares or transferable certificates of interest.
  • Otherwise be taxable as a domestic corporation
  • Jointly owned by 100 persons or more
  • Have 95 percent of its income derived from dividends, interest, and property income
  • Cannot be a financial institution or an insurance company
  • Have no more than 50% of the shares held by five or fewer individuals during the last half of each taxable year (5/50 rule)
  • Derive at least 75% of its gross income from rents or mortgage interest
  • Have no more than 25% of its assets invested in taxable REIT subsidiaries.

They pay dividends of at least 90%, meaning that 90% of the profits they make will go straight to the investors.

Many people consider REITs a safer investment than stocks, and many people are looking to diversify their portfolio with something that provides consistent cash flow every month or quarter.

O – The Monthly Dividend Company

realty income stock

Realty Income, (ticker symbol O), is called the “Monthly Dividend Company” for a reason. Most dividends are paid quarterly, but Realty Income is the leader in monthly-payers, meaning you get a check 12 times a year instead of 4 times a year.

What else seperates Realty Income from their competitors on the stock market?

  • 596 consecutive dividends, amounting to almost 50 YEARS in monthly dividends.
  • Grown their dividend an average of 4.5% annually since their 1994 NYSE listing.
  • 90 consecutive quarterly increases. They have increased the amount they pay their shareholders for 22 consecutive years!
  • Their compounded annual return since their NYSE listing is 16.5%.

Basically, you would’ve made a killing on Realty Income stock if you would’ve invested at their listing in 1994. But can you still make a killing on them?

Realty Income Stock – Company Overview

Realty Income was created in 1969, with the goal to provide investors with monthly dividends that increase overtime. They have held true to that statement.

They became listed on the New York Stock Exchange in 1994, and are now a member of the S&P 500, meaning it is in the top 500 U.S companies by market-cap.

The only way they have been able to grow their dividend for so long is by growing their business. Many REITs hover at around the same level, but Realty Income is exceptional in their growth capabilities.

In the last 26 years, Realty Income has increased their portfolio of properties from 630 to 6,483 in 49 states, Puerto Rico, and the United Kingdom. In that time, they went from $451M in assets, to $19.5B.

Nobody can question their growth. But what we, as potential shareholders want to know, is can they keep it up?

Realty Income Dividend History – How Safe is their Future Growth?

The Realty Income Dividend History is an amazing sight to see, and certainly gives us hope for the future. But for the feeling to be more than hope, we have to examine the tangibles. How do they generate their dividend and make it grow overtime?

  • Run a Low-Risk Business Model
  • Collect Rent from Quality Tenants
  • Expand the Portfolio

Run a Low-Risk Business Model

It is easy to get caught up in growing in real estate, and oftentimes companies grow too fast.

Realty Income focuses on growing consistently, not fast. You won’t get rich quick with this company, their goal is to get rich slowly.

As you can see, every year over the six-year period is consistent growth. They are adding new properties every year, therefore increasing total revenue, which increases the net income that is shared with stockholders!

Collect Rent from Quality Tenants

Realty Income is host to a diverse set of tenants, and they are all quality companies. Their biggest source of revenue is from Walgreen’s, with their leases taking 6.1% of Realty Income’s revenue.

We have heard of most, if not all of these companies. Their biggest sources of revenue come from companies at the top of their field in terms of revenue—

  • Walgreen’s – #2 Retail Pharmacy in the US
  • 7-Eleven – #1 Convenience Store in the US
  • Dollar General – #1 Discount Store in the US
  • FedEx – #2 Courier Company in the US
  • Dollar Tree / Family Dollar – #2 Discount Store in the US

Realty Income’s top 5 sources of revenue are among the top sources of revenue in their industry! And they dominate their industry. This delivers some safe reassurance to the quality of tenant, and to how safe the cash flow is for Realty Income stock.

Diversity is also a very important topic when discussing real estate, and Realty Income has spread their many commercial properties across 301 different tenants much like the five above. This is an important part of owning rental properties, and Realty Income takes good notes on diversification.

You should start being able to connect the dots. Since the portfolio has been filled with high-quality tenants on high quality properties, cash flow has been more consistent. Since cash flow is more consistent when compared to most companies, it is easy to see why the Realty Income dividend history is so strong.

Expand the Portfolio

There are many cash flow-producing companies that have stopped growing. They simply maintain their current level of capitalization and instead focus on paying their investors.

What you should really look for is a company that is focused on growth, while keeping their investors in the front. A company that can do both is a company that you should invest in.

Realty Income does this, and they have proven it time and time again:

  • Realty Income Dividend History
  • Realty Income Dividend Growth Rate
  • Realty Income Commercial Leases
  • Realty Income Property Expansion

This chart symbolizes the care that Realty Income puts into its name, and its shareholders.

Realty Income stock tumbled during the Great Recession, losing almost 7 years of value. This is similar to most companies at the time, but one thing separated this company from the rest:

Where most company cut or lowered their dividend, Realty Income’s dividend continued to rise.

This means a lot. This means that the company was still in such a stable position during one of the largest housing market crashes in history, that they could increase their dividend. They could have lowered the dividend, or kept it the same. But they continued to increase it, because that’s what they stated their goal was all those years ago: To provide a monthly dividend to shareholders.

This is a visual depiction of the dividend increases since Realty Income’s NYSE listing in 1994. They paid dividends before this as well.

Realty Income Stock – Long-term Outlook

Realty Income is a great company. They aren’t the cheapest deal on the market, but they aren’t the most expensive either. Find a nice entry point, and this company can reward you in the long-term

With a dividend yield of 6.45% that is paid monthly, your compounding potential increases exponentially. I wouldn’t be concerned about the dividend lowering. Realty Income’s dividend history is amazing, and they have solidified their track record with the consistent expansion of their portfolio.

It seems their management knows what they are doing.


Alex Griffith

Alex Griffith

5 thoughts on “Realty Income Stock | An Investment for the Future?

  1. Interesting article. I study stocks, forex market, and even real estate investment in my spare time. I’m interested in creating multiple sources of income through various investments such as mentioned. Realty Income sounds like an interesting company that I should study a bit further. Thanks for sharing this article.

  2. Very interesting. While I do not have a lot of knowledge in this area, I feel that your website can help me in that area. Hopefully I can learn a thing or two about this area.
    Thanks for sharing!

  3. This is a good post and site. The article and I found myself looking into the companies background and at their assets portfolio, very impressive. Nothing on their site about COVID-19 which I find strange but the site may not have been updated recently. Anyway, you present a very good case on their behalf and I would love to invest in the UK market.

  4. Hi Alex,
    This is great information, thank you.
    Our stock is quite diversified already, with some of it in REITs. But it’s good to know about this particular company.
    I’m sure they’ve dropped somewhat with this global crisis right now, but I’m sure they all have. It’s good to know how well they did after the market housing crash. I have every hope they’ll do well again once this Covid crisis is over.
    Thanks again,

    1. Indeed they did fall, along the same lines as the other REITs. However, they gave a 4.5% dividend increase during this pandemic, just going to show their good nature in decades of dividend growth.

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