This cheap stock has raised its dividend for over 25 years in a row. Here’s why it’s worth looking at right now.

Real estate income (NYSE: O) is one of the largest and most popular real estate investment trusts (REITs) in the market. The company owns a portfolio of nearly 15,500 properties in the United States and Europe and has paid 647 consecutive monthly dividends to its investors.

Designed to generate steadily increasing income over time, Realty Income has a proven track record of intelligent capital allocation and exceptional returns. And right now is a rare opportunity to buy this proven winner on sale.

Realty Income’s Business: The Short Version

Realty Income specializes in net lease real estatewhich essentially means most types of single-tenant commercial properties. About 80% of the company’s rental income comes from commercial properties, but don’t let the term “retail” scare you: Realty Income has generated steadily increasing revenue year after year for two main reasons.

First, most of Realty Income’s tenants are recession-resistant, not vulnerable to e-commerce competition, or both. Specifically, most properties fall into one of four categories:

  • Non-discretionary retailers like pharmacies that sell things that people need.

  • Discount-focused retailers, like warehouse clubs and dollar stores, offer great deals that online retailers can’t match.

  • Service-based retailers like fitness clubs that sell a service or experience, as opposed to a physical product.

  • Non-commercial businesses, including industrial, gaming and agricultural properties, which collectively account for approximately 20% of the company’s rent.

Second, the net lease structure is designed to ensure consistency and steady growth. Realty Income’s leases typically have initial terms of a decade or more, with annual rent increases built in. The net lease structure means tenants are responsible for covering property taxes, building insurance and most maintenance costs.

In other words, tenants cover the variable expenses of owning a property. Realty Income simply purchases a property with a quality tenant in place and collects predictable, growing income year after year.

Realty Income has an excellent track record of intelligent capital allocation and, as one of the few REITs with an A credit rating from both Moody’s and Standard & Poor’s, it has a competitive advantage when it comes to raising debt capital.

An exceptional track record

The proof is in the performance. While Realty Income is well off its current highs, the stock has still generated an annualized total return of 13.6% since it was listed on the New York Stock Exchange in 1994. To put that in perspective, consider that a $10,000 investment in Realty Income 30 years ago would be worth about $470,000 today, more than double what a $10,000 investment in Realty Income would be worth about $470,000 today…. S&P 500 the index fund would have produced.

O Total Return Level Chart

For income-seeking investors, Realty Income not only has a dividend yield of just under 6% as of this writing, but has also increased its payout for 107 consecutive quarters. Assuming dividend reinvestment, someone who invested $10,000 in Realty Income’s 1994 IPO would receive…

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