Realty Income Lifts Monthly Dividend 137th Time Since 1994
Realty Income, the real estate investment trust known as The Monthly Dividend Company, will pay $0.274 per share on December 15. Shareholders of record by November 30 qualify. The payout is up 0.9% from the prior month and extends a 117-quarter growth streak.
Realty Income (NYSE: O), the real estate investment trust (REIT) known as The Monthly Dividend Company, will pay $0.274 per share on December 15, up 0.9% from the prior month. It is the company's 137th dividend increase since it listed on the New York Stock Exchange in 1994. Investors who want to meet a monthly dividend stock this month have a firm deadline: they must own shares by the November 30 record date.
Buying on December 1 would push the first payment into the new year, according to the company's schedule.
Growth streak and payout
The latest raise extends Realty Income's run of quarterly dividend growth to 117 straight quarters. That is more than 32 consecutive years of increases.
Most dividend stocks pay four times a year. Realty Income pays every month.
Valuation and coverage
The stock recently traded around $60 per share, more than 10% below its 52-week high. At that price the new rate yields 5.5%.
Realty Income expects about $4.45 per share of adjusted funds from operations (AFFO) this year. AFFO is a cash-flow measure REITs use in place of earnings. That figure comfortably covers the annual dividend of $3.288 per share, and the stock trades at 13.5 times earnings.
Rates weigh on the shares
Higher interest rates have pressured the price. The 10-year Treasury yield is above 5%, up from around 4% before the war with Iran began earlier this year. The war has fueled a resurgence in inflation, and the Federal Reserve has raised rates again.
The Fed meets in early December after pausing at its last meeting. A further hike, possibly 50 basis points, is likely, according to the analysis behind this report. A forceful move could spark a rally in rate-sensitive stocks such as REITs.
Long-term strategy
Realty Income says two trends drive its growth. One is a nearly $50 trillion investment need to fund retirement income for an aging global population. The other is $15 trillion of real estate sitting on corporate balance sheets across the U.S. and Europe.
The company recently formed an investment management platform that lets institutional investors invest alongside it. Its first joint venture is with Apollo, which is putting $1 billion of insurance capital into a portfolio of U.S. retail properties. The stable, contractually secured cash flows from those properties suit insurers' long-term needs, the company says.
Realty Income expects the platform to speed AFFO per share growth by funding additional investments.
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