Source: Realty Income Annual report

Realty Income Corp. (O -0.83%) posted excellent first quarter results, growing funds from operation and improving on several key metrics. Here's 6 big wins in Realty Income Corp.'s first quarter results:

1. Occupancy rates improve
Occupancy rates were excellent this quarter. The company reported an occupancy rate of 98.3%, improving on 97.7% occupancy last year, and 98.2% occupancy last quarter.

Occupancy is obviously one of the most important factors for a real estate investment trust, as each vacancy costs the company lost rents and lower returns. 

2. New acquisitions
Realty Income Corp. added more properties to its umbrella, investing $656.7 million to buy 337 new properties. Many of these acquisitions likely came from one $503 million portfolio purchase from Inland Diversified Real Estate Trust, in December. An SEC filing from February details the terms of the deal, which included 84 single-tenant properties with an average lease term of 13.7 years. Though the contract was signed in December, $202 million was closed in January, with the remainder closing in March and early April.

The first quarter was particularly active for Realty Income, as it had to issue new shares to raise as much as $528.5 million after fees and other expenses. However, the company's history showcases how powerful new equity raises can be, as it allows the company to grow the balance sheet, and funds from operations, on a per-share basis.

3. Dividend coverage improves
Realty Income's reported funds from operations grew to $0.65 per share, while adjusted funds from operations improved to $0.64 per share. FFO and AFFO are excellent measures of the company's long-term profitability and maximum dividend potential each quarter.

Last quarter, the company earned just $0.61 in FFO per share. In the fourth quarter of 2012, the company reported $0.56 in FFO per share. Clearly, the trend is favorable; new acquisitions and rising rents have boosted profitability, and potential dividends.

4. Rents are rising
Realty Income reported that its same store rents rose by 1.5% year over year. In previous conference calls, CEO John Case has noted that the company has annual rent increases of 1.5% built into 70% of its investment-grade leases. The typical retail rate increase for Realty Income is in the neighborhood of 1.25% per year, whereas its office and industrial properties include annual adjustments of 2% per year.

Over time, rising rents are the key to growing profitability. As a triple-net leasing company, Realty Income Corp. isn't exposed to costs like property taxes, maintenance, and insurance, meaning rental hikes can flow directly to the bottom line.

5. Average lease lives stay elevated
The company's stability comes from its long-dated leases. This quarter, the company reported its average lease life stood at 10.8 years, unchanged from the previous quarter.

The portfolio's weighted average lease life is important for understanding the future stability of rental income, as longer-term leases lock in tenants for several years at a time. At 10.8 years, it's safe to say that rental revenue will continue to flow in for years to come.

The Foolish bottom line
Realty Income Corp. investors have come to expect stable dividends that grow over time. The company's first quarter results prove that a consistently growing dividend is still in the cards for shareholders, who have seen dividends grow by a compound rate of 6.1% over the last 10 years.