This impressive dividend-yielding stock deserves consideration for your investment portfolio.
Realty Income, rocking the REIT scene with an O of 0.21%, has been an ace investment for years now. This real estate investment trust (REIT) is known for its consistent returns, dividends, and a solid financial standpoint, making it an essential component of any investment portfolio. Let's dive deeper into why Realty Income should be your go-to choice.
A Bonafide Performer
Realty Income's performance is nothing short of impressive. The REIT has been a beast of consistency, posting a positive total operational return (dividend income plus adjusted funds from operations or FFO per share growth) for an astounding 29 years since its IPO in 1994. To put that into perspective, it has grown its adjusted FFO per share at a 5.7% compound annual rate, boosting its dividend at a 4.3% compound rate annually. Meanwhile, its average total return has been a whopping 14.1% since its public market listing in '94.
The REIT's dedication to its dividend hasn't gone unnoticed either. It's raised the payment a staggering 127 times since its IPO, with at least one increase per year for 30 straight years and for the last 108 quarters in a row. If you had purchased 100 shares at the IPO price of $800 back in 1994, you'd now be sitting on a juicy $3,075 in dividends and a stock worth around $5,750 for a total return of over 5,000%. That's a pretty solid payday!
Low-Risk & Lucrative
Realty Income invests in income-generating net lease real estate, which features secure cash flow and property value protection, even if tenants forego lease renewals. The company has diligently expanded its portfolio through accretive acquisitions of net lease properties and other net lease REITs, giving it a strong financial footing. Today, Realty Income is one of the eight REITs with elite A-/A3 or better credit ratings, with a prudent dividend payout ratio of around 75% of its adjusted FFO, ensuring financial flexibility for growth.
Moving Forward
Realty Income currently owns around $58 billion worth of real estate across eight countries, making it the world's seventh-largest REIT. Its diverse portfolio of more than 15,450 properties includes leased to over 1,550 tenants in 90 different industries. While 80% of its rent stems from retail tenants, industrial real estate accounts for almost 15%, and gaming and other property types like data centers round off the remaining 3%. The REIT is far from reaching its full potential, with a total addressable net lease real estate market estimated at a colossal $13.9 trillion.
Realty Income's potential hasn't gone unnoticed either – the company reviews tens of billions of investment opportunities each year and goes on to acquire a mere 8% of them, ensuring only the best low-risk properties make it into the fold. With its selectivity in deals, Realty Income has managed to grow its annual investment volume from $1.2 billion in 2012 to $9.5 billion last year, with a fast-paced growth rate since 2012.
Wrapping Up
Realty Income possesses all the key features that make it an excellent long-term investment. Its low-risk enterprise features a diversified portfolio of net lease real estate offering a stable income stream, paired with a sturdy balance sheet. This combination allows it to consistently pay a rising dividend, currently yielding over 5.5%. With a massive addressable market opportunity and a robust financial profile, Realty Income is primed to continue growing at an attractive rate, delivering attractive returns for its investors.
After demonstrating its consistency and impressive performance for nearly three decades, Realty Income's strong financial standpoint makes it a valuable consideration for any investor's finance portfolio, allowing for potential growth and lucrative returns through investing in its income-generating real estate properties.
Furthermore, Realty Income's strategic approach to investing in net lease properties, coupled with its solid financial footing and stellar credit ratings, ensures a low-risk investment opportunity with a growing dividend yield, making it an ideal choice for those seeking both stability and profitability in the finance sector.
