Monthly Dividend Stocks: Realty Income Corporation (NYSE:O)
By: Ned Piplovic,
With more than 20 years of consecutive annual dividend hikes and asset appreciation of nearly seven-fold since 2000, the Realty Income Corporation (NYSE:O) has been one of the most reliable monthly dividend stocks over the past two decades.
The company’s current streak of consecutive annual dividend hikes stretches back 23 years. However, the Realty Income Corporation has not missed a single monthly dividend payout in the past five decades.
Between late-2016 and early-2018, the Realty Income Corporation experienced its largest share price decline since operating as a publicly-traded business entity. However, after losing nearly one third of its value, the share price reversed course and has been again rising steadily since February 2018. Since embarking on this current uptrend, the share price has recovered all losses from the 2016 to 2018 decline and has reached new all-time highs by late-March 2019.
Since the current ex-dividend date was on June 28, 2019, investors interested in taking a long position in the Realty Income Corporation stock might have missed the opportunity to claim the next round of dividend payouts in mid-July. However, the benefit of monthly dividend stocks like the Realty Income Corporation is that the next dividend distribution is not far behind. The company’s next ex-dividend date should be at the end of July with a pay date approximately two weeks later in mid-August.
Realty Income Corporation (NYSE:O)
Headquartered in San Diego, California, and founded in 1969, the Realty Income Corporation is a Real Estate Investment Trust (REIT) that focuses primarily on acquiring, developing and leasing retail and commercial real estate facilities. As of May 2019, the company had more than 5,870 properties under long-term net lease agreements in 49 U.S. states and Puerto Rico with more than 90 million square feet of total leasable space. The company’s largest presence is in Texas, where the REIT has 713 properties — 12.1% of its total properties — that generate 11.6% of the company’s total annual income. More than 260 commercial tenants across 48 industries currently occupy Realty Income Corporation’s properties. The top five tenants in terms of location count are Dollar General (600), Dollar Tree/Family Dollar (469), 7-Eleven (398), Circle K (297) and Walgreens (218). However, despite being only fifth in number of properties, Walgreens-leased properties generate 6.1% of REITs total revenue. Additionally, 7-Eleven (5.4%) FedEx (4.7%), Dollar General (4%) and LA Fitness (3.6%) round out the top five tenants in terms of total revenue generated. Since its founding, the company has paid 586 consecutive monthly dividends and increased the dividend 96 times since Realty Income’s public listing in 1994.
Monthly Dividend Stocks: Realty Income Corporation Dividends
While the Realty Income Corporation is one of the monthly dividend stocks, the company generally hikes it dividend payouts quarterly. The Realty Income Corporation has boosted its dividend payout for the past 82 consecutive quarters. Over the past two decades the company enhanced its total annual dividend payout nearly 160%. This advancement pace corresponds to an average growth rate of nearly 5% per year for two decades. The dividend growth rate fell slightly between 2008 and 2012 in the aftermath of the 2008 financial crisis, which reduced the average annual dividend growth rate down to 4.7% for the past 10 years and holds steady at the same level for the most recent three-year period.
The REIT’s current $0.227 monthly dividend payout corresponds to a $2.72 annualized distribution. This annualized payout is equivalent to a 3.9% forward dividend yield. The share price growth pace exceeded the dividend rise over the past five years, which pushed the current yield 10% below the company’s own five-year yield average of 4.31%. However, the Realty Income Corporation’s current yield is still nearly 26% higher than the 3.08% simple average yield of the entire Financial sector, including many other monthly dividend stocks.
Monthly Dividend Stocks: Realty Income Corporation Share Price
After the significant decline from late-2016 to early-2018, the share price stabilized and resumed the steady slope of its long-term uptrend for most of the trailing 12-month period. Just one week into the current one-year period, the share price passed through its 52-week low of $53.28 on its way to full recovery. After bottoming out on July 2, 2018, the share price gained nearly 40% before reaching its new all-time high of $73.98 on March 26, 2019. Since peaking in late-March, the share price pulled back nearly 5% to close on June 25, 2019, at $70.41. This closing price marked a 29.5% advancement over the past 12 months and 32.2% above the 52-week low in the first week of July last year. Furthermore, the June 25, closing price was nearly 60% higher than it was five years ago.
Despite strong long-term growth, the share price decline from the second half 2016 to early-2018, limited the total return on shareholders’ investment to less than 20% over the last three years. However, the strong share price recovery contributed to the rising dividend income over the last year for a total return of nearly 35% over the past 12 months. Over the past five years, the rising dividend income and asset appreciation rewarded the company’s shareholders with a total return of 87%.
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