Investors looking for a high-yield income investment that provides them with a dependable basis of monthly cash flow, should take a closer look at Realty Income (NYSE:O). The real estate investment trust is one of the most promising commercial REITs in the entire REIT sector and has a fantastic dividend record.
Building long-term wealth is not that difficult if investors take advantage of high quality income vehicles like Realty Income. In fact, investors who exercise discipline and make a commitment to regularly purchase high-yielding income stocks put their wealth building journey pretty much on auto-pilot.
One of a kind growth record
There are many companies out there providing regular income for investors, but only a few have the status and record of Realty Income. The commercial REIT invests largely in retail properties and rents them out to clients such as Walgreens or FedEx.
Approximately 44% of its 211 tenants are rated investment-grade and the company has properties in 49 states as well as Puerto Rico leading to an exceptional degree of geographic and industry diversification.
A high degree of diversification among industries, geographies and tenants substantially reduces the risk profile of Realty Income and makes it so much more likely that the company, as demonstrated in the past, can withstand economic headwinds and deep recessions without sacrificing too much of a dip in earnings.
In fact, Realty Income has stepped up its game over the last four years by improving its risk profile even further: While the number of investment properties rose 80% since the end of 2013 to 4,208 at the end of the first quarter 2014, Realty Income materially reduced its reliance on any particular industry or tenant.
Source: Realty Income Investor Presentation
Enviable dividend record and monthly distributions
Realty Income has one of the best dividend records in the industry. Since 1994, when the REIT pursued its IPO, the dividend champion has churned out 527 dividends including 76 dividend increases.
Realty Income has also branded itself as the 'Monthly Dividend Company' since the REIT pays its dividends on a monthly basis rather than quarterly.
Monthly distributions offer investors a lot of advantages. First of all and most obviously, monthly instead of quarterly distributions provide investors with a higher frequency of payments allowing them to better match their portfolio investment income with their living expenses.
Secondly, monthly distributions give investors access to a much larger set of reinvestment opportunities and the ability to take advantage of falling stock prices.
Don't forget to reinvest your dividends
Unfortunately, many investors don't take full advantage of the power of compounding. Investors who are regularly reinvesting their dividends, for instance via Realty Income's 'Direct Stock Purchase and Dividend Reinvestment Plan' can turbocharge their investment returns (and save them a lot of investment fees).
Regularly reinvesting dividends is an almost fool-proof way of generating long-term sustainable wealth.
Source: Realty Income Investor Presentation
Realty Income is a true dividend machine with an impressive dividend growth record. Its property portfolio has consistently grown while the REIT has materially reduced its reliance on specific tenants and industries.
Monthly distributions and the availability of a low cost dividend reinvestment plan further support investors who are serious about building long-term wealth via a well run, high quality REIT.
Round out the rest of your income portfolio
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.
Kingkarn Amjaroen owns shares of Realty Income. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.