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Is Realty Income's (O) 112th Monthly Dividend Hike Sustainable?
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Realty Income Corporation (O - Free Report) recently announced its 112th common stock monthly dividend hike since the company’s NYSE listing in 1994. The company will now pay 23.6 cents per share in dividend compared with the 23.55 cents paid earlier.
The increased dividend will be paid on Oct 15, to shareholders on record as of Oct 1, 2021. The latest dividend rate marks an annualized amount of $2.832 per share versus the prior rate of $2.826 per share. Based on the company’s share price of $68.21 on Sep 14, it results in a dividend yield of 4.15%.
Solid dividend payouts are the biggest enticement for REIT investors, and Realty Income is committed to boosting shareholder wealth. Remarkably, this retail REIT enjoys a trademark of the phrase “The Monthly Dividend Company”.
The latest hike comes by a marginal figure from the prior dividend paid, but the October dividend payment marks the company’s 615th consecutive monthly dividend payment in its 52-year operating history. The company has made 96 consecutive quarterly dividend hikes. The retail REIT has witnessed compound average annual dividend growth of 4.4% since its listing on the NYSE.
The latest hike reflects Realty Income’s ability to generate decent cash-flow growth through its operating platform and high-quality portfolio. With the current cash-flow growth rate of 4.33%, as against the industry’s average of a negative 21.22%, the increased dividend is likely to be sustainable.
Realty Income derives 95% of its annualized retail contractual rental revenues from tenants with a service, non-discretionary and/or low-price-point component to their business. Such businesses are less susceptible to economic recessions as well as competition from Internet retailing. This boosts the stability of rental revenues and generates predictable cash flows.
Moreover, Realty Income exited second-quarter 2021 with $1.9 billion of liquidity, including $231 million of cash and equivalents. The company had a revolver availability of $1.7 billion. The company ended the quarter with modest leverage and strong coverage metrics. Further, Realty Income has a credit rating of A- and A3 from Standard & Poor’s and Moody’s, respectively, enabling it to procure debt financing at attractive costs.
Realty Income has also inched closer to the VEREIT Inc. merger with its shareholders and VEREIT stockholders approving all of the proposals essential for the deal’s closure. The merger is expected to close during fourth-quarter 2021. The combined entity is poised to benefit from the enhanced size, scale, diversification and synergies, particularly through the accretive debt-refinancing opportunities.
The Zacks Consensus Estimate for Simon Property Group’s (SPG - Free Report) current-year FFO per share estimate has moved up 2.4% to $10.82 in the past month. The company carries a Zacks Rank of 2, currently.
Regency Centers Corporation (REG - Free Report) holds a Zacks Rank of 2, at present. The Zacks Consensus Estimate for its 2021 FFO per share has been revised 5.1% upward to $3.70 in a month’s time.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Is Realty Income's (O) 112th Monthly Dividend Hike Sustainable?
Realty Income Corporation (O - Free Report) recently announced its 112th common stock monthly dividend hike since the company’s NYSE listing in 1994. The company will now pay 23.6 cents per share in dividend compared with the 23.55 cents paid earlier.
The increased dividend will be paid on Oct 15, to shareholders on record as of Oct 1, 2021. The latest dividend rate marks an annualized amount of $2.832 per share versus the prior rate of $2.826 per share. Based on the company’s share price of $68.21 on Sep 14, it results in a dividend yield of 4.15%.
Solid dividend payouts are the biggest enticement for REIT investors, and Realty Income is committed to boosting shareholder wealth. Remarkably, this retail REIT enjoys a trademark of the phrase “The Monthly Dividend Company”.
The latest hike comes by a marginal figure from the prior dividend paid, but the October dividend payment marks the company’s 615th consecutive monthly dividend payment in its 52-year operating history. The company has made 96 consecutive quarterly dividend hikes. The retail REIT has witnessed compound average annual dividend growth of 4.4% since its listing on the NYSE.
The latest hike reflects Realty Income’s ability to generate decent cash-flow growth through its operating platform and high-quality portfolio. With the current cash-flow growth rate of 4.33%, as against the industry’s average of a negative 21.22%, the increased dividend is likely to be sustainable.
Realty Income derives 95% of its annualized retail contractual rental revenues from tenants with a service, non-discretionary and/or low-price-point component to their business. Such businesses are less susceptible to economic recessions as well as competition from Internet retailing. This boosts the stability of rental revenues and generates predictable cash flows.
Moreover, Realty Income exited second-quarter 2021 with $1.9 billion of liquidity, including $231 million of cash and equivalents. The company had a revolver availability of $1.7 billion. The company ended the quarter with modest leverage and strong coverage metrics. Further, Realty Income has a credit rating of A- and A3 from Standard & Poor’s and Moody’s, respectively, enabling it to procure debt financing at attractive costs.
Realty Income has also inched closer to the VEREIT Inc. merger with its shareholders and VEREIT stockholders approving all of the proposals essential for the deal’s closure. The merger is expected to close during fourth-quarter 2021. The combined entity is poised to benefit from the enhanced size, scale, diversification and synergies, particularly through the accretive debt-refinancing opportunities.
Shares of this Zacks Rank #3 (Hold) company have gained 2.2% so far in the quarter compared with the industry’s rally of 1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Stocks to Consider
The Zacks Consensus Estimate for Simon Property Group’s (SPG - Free Report) current-year FFO per share estimate has moved up 2.4% to $10.82 in the past month. The company carries a Zacks Rank of 2, currently.
Regency Centers Corporation (REG - Free Report) holds a Zacks Rank of 2, at present. The Zacks Consensus Estimate for its 2021 FFO per share has been revised 5.1% upward to $3.70 in a month’s time.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.