Some companies do an incredible job of paying dividends. Realty Income (O +0.21%) is one such company. The real estate investment trust (REIT) recently delivered its 131st dividend increase to its investors since its public market listing in 1994. It's the REIT's fourth dividend increase already this year.
With one of the most bankable high-yielding monthly dividends around, Realty Income is an ideal stock to buy and hold for passive income.
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Putting even more income into investors' pockets
Realty Income recently declared its latest monthly dividend payment. The REIT will pay investors $0.269 per share in mid-July to those who own the stock by the first of next month. That raises its annualized dividend rate to $3.228 per share, which is a more than 5.5% yield at its recent stock price. The payout is 0.2% higher than its last payment and 2.3% above the year-ago level.
The REIT's most recent raise is its 131st since coming public. It also extends the company's growth streak to 111 quarters in a row. Realty Income has increased its dividend in all 30 years since its public market listing.
Data source: Realty Income.
CEO Sumit Roy commented on Realty Income's latest dividend declaration in a press release. He stated, "The quality and diversification of Realty Income's portfolio allows us to provide investors reliable monthly dividends that increase over time." The CEO also remarked, "During times of market uncertainty, Realty Income remains committed to delivering investors predictable income streams."
Showing no signs of stopping
Realty Income should have no problem continuing to increase its dividend in the future. Driving that view is the strong foundation the company has built over the years.
The bedrock is its high-quality real estate portfolio. Realty Income owns a diversified portfolio of over 15,600 retail, industrial, gaming, and other properties net leased to many of the world's leading companies. Notable tenants include 7-Eleven, Dollar General, FedEx, Home Depot, and Walmart. Its focus on investing in properties secured by long-term net leases enables the REIT to generate very predictable cash flow because tenants cover all property operating expenses, including routine maintenance, real estate taxes, and building insurance.
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Key Data Points
Realty Income pays out a conservative percentage of its stable cash flow in dividends -- 75% of its adjusted funds from operations (FFO) in the first quarter. That gives it a comfortable cushion while allowing it to retain meaningful excess free cash flow to invest in more income-generating properties each year. It produced nearly $238 million in adjusted FFO after dividends in the first quarter of this year.
The REIT also has a fortress balance sheet. It's one of only 10 REITs in the S&P 500 (^GSPC +0.84%) with two bond ratings of A3/A- or higher. Realty Income's excellent credit provides it with lower borrowing costs to fund new investments.
Realty Income's diversification helps lower its risk profile while enhancing its growth prospects. The company estimates that the total addressable market for net lease real estate is $5.5 trillion in the U.S. and $8.5 trillion in Europe. The REIT has been steadily growing its opportunity set by expanding into new property verticals. It recently added U.S. gaming ($400 billion) and U.S. data centers ($500 billion) to its portfolio.
The company has also expanded into additional European markets, added a credit investment platform, and is launching a private capital fund in the U.S. Its growing diversification has further expanded its already massive growth runway.
An incredible passive income investment
Realty Income continues to steadily increase its already attractive monthly dividend payment. The REIT backs its payout with a high-quality real estate portfolio and top-notch financial profile. Add in its massive growth runway, and the REIT's dividend should remain unstoppable. Because of that, it's an ideal stock to buy and hold for a lifetime of passive dividend income.
