Ushering in good news for shareholders, Realty Income Corporation (O - Free Report) recently announced its 100th common stock monthly dividend hike since the company’s NYSE listing in 1994. The company will now pay 22.55 cents per share compared with the 22.1 cents paid earlier.
The increased dividend will be paid on Feb 15 to shareholders on record as of Feb 1, 2019. The latest dividend rate marks an annualized amount of $2.706 per share versus the prior rate of $2.652 per share. Based on the company’s share price of $64.77 on Jan 15, this results in a dividend yield of around 4.18%.
Admittedly, solid dividend payouts are the biggest enticement for REIT investors and Realty Income remains committed to boosting shareholders’ wealth. The company enjoys a trademark of the phrase “The Monthly Dividend Company”.
In fact, although the latest hike came by a marginal figure, this marks a 3% increase compared to the same month in the previous year and the company’s 583 consecutive monthly dividend payments throughout its 50-year operating history. Moreover, the company has made 85 consecutive quarterly dividend hikes, which is encouraging. In fact, this retail REIT has witnessed compound average annual dividend growth of around 4.6% since its listing on the NYSE. Given its financial position and lower debt-to-equity ratio compared to the industry, the recent dividend rate will likely to be sustainable.
At a time when declining mall traffic, store closures and bankruptcy of retailers have plagued the retail REIT sector, including Urban Edge Properties (UE - Free Report) , Taubman Centers, Inc. (TCO - Free Report) and Macerich Company (MAC - Free Report) , Realty Income is able to differentiate itself by deriving more than 90% of its annualized retail rental revenues from tenants belonging to the service, non-discretionary and low-price retail business. Such businesses are less susceptible to economic recessions, as well as competition from Internet retailing.
Moreover, the company’s accretive acquisitions and solid balance-sheet strength augur well for long-term growth. In fact, prudent underwriting at acquisitions has helped maintain high occupancy levels consistently. Additionally, its same-store rent growth underlines limited operational volatility. Nonetheless, the company’s exposure to single-tenant assets raises risks associated with tenant default. Further, rate hike adds to its woes.
Shares of Realty Income have outperformed the industry it belongs to, in the past three months. This Zacks Rank #3 (Hold) stock has appreciated 11.6%, while the industry has gained 9.2% during the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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