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Realty Income Announces 128th Dividend Hike: Is it Sustainable?
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Realty Income Corporation (O - Free Report) has announced an increase in its common stock monthly cash dividend to 26.40 cents per share from 26.35 cents paid out earlier. This marked its 128th dividend hike since its listing on the NYSE in 1994.
The increased amount will be paid out on Jan. 15 to its shareholders on record as of Jan. 2, 2025. The latest dividend rate marks an annualized amount of $3.168 per share compared with the prior rate of $3.162. Based on the company’s share price of $55.78 on Dec. 10, the latest hike results in a dividend yield of 5.68%.
Though the latest hike marks a marginal increase from the prior dividend, the latest dividend announced will be the company’s 654th consecutive monthly dividend payout in its 55-year operating history.
Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors, and Realty Income is committed to boosting its shareholder wealth. This retail REIT holds the trademark of “The Monthly Dividend Company.” It has made 109 consecutive quarterly dividend hikes. This retail REIT has witnessed compound average annual dividend growth of 4.2% since its listing on the NYSE.
Moreover, Realty Income has increased its dividend 23 times in the last five years and has a five-year annualized dividend growth rate of 3.04%. Check Realty Income’s dividend history here.
Realty Income’s Business Model Supports Sustainable Dividend Payment
The latest hike reflects O’s ability to generate decent cash flow through its operating platform and high-quality portfolio. The majority of its annualized retail contractual rental revenues are generated by clients who have a service, non-discretionary and/or low-price-point component to their business. Such businesses are less likely to be affected by economic downturns and competition from online sales. These provide more reliable streams of income, which boost the stability of rental revenues and generate predictable cash flows.
Moreover, Realty Income’s diversified tenant base and accretive buyouts bode well for its long-term growth. The solid property acquisitions volume at decent investment spreads has aided the company’s performance so far. During the third quarter of 2024, O invested $740.1 million in 169 properties and properties under development or expansion at an initial weighted average cash yield of 7.4%. Backed by improvements in the investment environment, this REIT also increased its 2024 investment volume guidance to around $3.5 billion during the third-quarter earnings release.
Realty Income maintains a healthy balance sheet position and exited the third quarter of 2024 with $5.2 billion of liquidity. The company ended the quarter with modest leverage and strong coverage metrics, with net debt to annualized pro forma adjusted EBITDAre of 5.4x and a fixed charge coverage of 4.6x. Realty Income has a well-laddered debt-maturity schedule with a weighted average maturity of 6.9 years.
With ample financial flexibility, the company remains well poised to respond to challenges and bank on growth opportunities. With a healthy financial position and a lower debt-to-equity ratio compared with the industry, we expect the latest dividend rate to be sustainable.
However, investors’ concerns brewed up because President-elect Donald Trump’s pledge for tariff impositions could hurt certain retailer tenants of Realty Income. Also, market uncertainties emanating from policy shifts and economic volatility and anticipations for the return of higher inflation and interest rates made investors skeptical about their investments in Realty Income stock. As such, over the past six months, shares of this Zacks Rank #3 (Hold) company have gained 5.9%, underperforming its industry’s growth of 18.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Other REITs Announcing Dividend Increases in Recent Times
On Dec. 10, Mid-America Apartment Communities (MAA - Free Report) , also known as MAA, the board of directors approved an increase in the company’s quarterly dividend payment. The company will now pay out $1.515 per share, reflecting a hike of 3.1% from the prior dividend of $1.47. Based on the increased rate, the annual dividend comes to $6.06 per share, marking an increase of 18 cents from the prior dividend. The new dividend will be paid out on Jan. 31 to its shareholders of record as of Jan. 15, 2025. Check Mid-America Apartment’s dividend history here.
On Dec. 9, Alexandria Real Estate Equities, Inc. (ARE - Free Report) announced a 1.5% sequential hike in its fourth-quarter 2024 cash dividend payment. Delighting its shareholders, the company will now pay out a dividend of $1.32 per share, up from the $1.30 paid out in the prior quarter. The increased dividend will be paid out on Jan. 15 to its shareholders on record as of Dec. 31, 2024. Check Alexandria’s dividend history here.
On Dec. 4, Whitestone REIT’s (WSR - Free Report) board of trustees recently declared a monthly cash dividend on its common shares and operating partnership units of 4.5 cents per share for the first quarter of 2025, representing a 9% increase from the previous dividend payout. The increased monthly dividend will be initially paid out on Jan. 14 to its shareholders of record as of Jan. 2, 2025. Check Whitestone REIT’s dividend history here.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Realty Income Announces 128th Dividend Hike: Is it Sustainable?
Realty Income Corporation (O - Free Report) has announced an increase in its common stock monthly cash dividend to 26.40 cents per share from 26.35 cents paid out earlier. This marked its 128th dividend hike since its listing on the NYSE in 1994.
The increased amount will be paid out on Jan. 15 to its shareholders on record as of Jan. 2, 2025. The latest dividend rate marks an annualized amount of $3.168 per share compared with the prior rate of $3.162. Based on the company’s share price of $55.78 on Dec. 10, the latest hike results in a dividend yield of 5.68%.
Though the latest hike marks a marginal increase from the prior dividend, the latest dividend announced will be the company’s 654th consecutive monthly dividend payout in its 55-year operating history.
Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors, and Realty Income is committed to boosting its shareholder wealth. This retail REIT holds the trademark of “The Monthly Dividend Company.” It has made 109 consecutive quarterly dividend hikes. This retail REIT has witnessed compound average annual dividend growth of 4.2% since its listing on the NYSE.
Moreover, Realty Income has increased its dividend 23 times in the last five years and has a five-year annualized dividend growth rate of 3.04%. Check Realty Income’s dividend history here.
Realty Income’s Business Model Supports Sustainable Dividend Payment
The latest hike reflects O’s ability to generate decent cash flow through its operating platform and high-quality portfolio. The majority of its annualized retail contractual rental revenues are generated by clients who have a service, non-discretionary and/or low-price-point component to their business. Such businesses are less likely to be affected by economic downturns and competition from online sales. These provide more reliable streams of income, which boost the stability of rental revenues and generate predictable cash flows.
Moreover, Realty Income’s diversified tenant base and accretive buyouts bode well for its long-term growth. The solid property acquisitions volume at decent investment spreads has aided the company’s performance so far. During the third quarter of 2024, O invested $740.1 million in 169 properties and properties under development or expansion at an initial weighted average cash yield of 7.4%. Backed by improvements in the investment environment, this REIT also increased its 2024 investment volume guidance to around $3.5 billion during the third-quarter earnings release.
Realty Income maintains a healthy balance sheet position and exited the third quarter of 2024 with $5.2 billion of liquidity. The company ended the quarter with modest leverage and strong coverage metrics, with net debt to annualized pro forma adjusted EBITDAre of 5.4x and a fixed charge coverage of 4.6x. Realty Income has a well-laddered debt-maturity schedule with a weighted average maturity of 6.9 years.
With ample financial flexibility, the company remains well poised to respond to challenges and bank on growth opportunities. With a healthy financial position and a lower debt-to-equity ratio compared with the industry, we expect the latest dividend rate to be sustainable.
However, investors’ concerns brewed up because President-elect Donald Trump’s pledge for tariff impositions could hurt certain retailer tenants of Realty Income. Also, market uncertainties emanating from policy shifts and economic volatility and anticipations for the return of higher inflation and interest rates made investors skeptical about their investments in Realty Income stock. As such, over the past six months, shares of this Zacks Rank #3 (Hold) company have gained 5.9%, underperforming its industry’s growth of 18.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Other REITs Announcing Dividend Increases in Recent Times
On Dec. 10, Mid-America Apartment Communities (MAA - Free Report) , also known as MAA, the board of directors approved an increase in the company’s quarterly dividend payment. The company will now pay out $1.515 per share, reflecting a hike of 3.1% from the prior dividend of $1.47. Based on the increased rate, the annual dividend comes to $6.06 per share, marking an increase of 18 cents from the prior dividend. The new dividend will be paid out on Jan. 31 to its shareholders of record as of Jan. 15, 2025. Check Mid-America Apartment’s dividend history here.
On Dec. 9, Alexandria Real Estate Equities, Inc. (ARE - Free Report) announced a 1.5% sequential hike in its fourth-quarter 2024 cash dividend payment. Delighting its shareholders, the company will now pay out a dividend of $1.32 per share, up from the $1.30 paid out in the prior quarter. The increased dividend will be paid out on Jan. 15 to its shareholders on record as of Dec. 31, 2024. Check Alexandria’s dividend history here.
On Dec. 4, Whitestone REIT’s (WSR - Free Report) board of trustees recently declared a monthly cash dividend on its common shares and operating partnership units of 4.5 cents per share for the first quarter of 2025, representing a 9% increase from the previous dividend payout. The increased monthly dividend will be initially paid out on Jan. 14 to its shareholders of record as of Jan. 2, 2025. Check Whitestone REIT’s dividend history here.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.