The Big Number Driving Realty Income Corp and National Retail Properties, Inc.

From a net income viewpoint, Realty Income and National Retail Properties seemed to move in opposite directions to start 2014. But it turns out funds from operations is the real number investors need to keep an eye on.

Jun 28, 2014 at 6:04AM

Realty Income's (NYSE:O) revenue rose nearly 30% to $220 million during the first three months of the year, but that its net income fell by 25%. Does that make you nervous?

What if I told you that peer National Retail Properties (NYSE:NNN) saw its income jump by nearly 25%?

Would you be really nervous?

Well, it turns out the glance at these dividend giants may be deceiving, as real estate investment trusts like Realty Income and National Retail properties don't exactly depend on net income to pay out their massive dividends to shareholders.

Instead, there is one critical number to watch to gauge how well these companies are performing. The slideshow below tells you exactly what that is, why it matters, and how different a story it can tell.

Top dividend stocks for the next decade
The reason this number matters is because it is used to payout the big dividends. And the smartest investors know dividend stocks like Realty Income and National Retail Properties simply crush their non-dividend paying counterparts over the long term.

They also know a well-constructed dividend portfolio creates wealth steadily, while 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.

 

Patrick Morris 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.

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