Realty Income Corporation (O - Free Report) recently announced its 105th common stock monthly dividend hike, since the company’s NYSE listing in 1994. The company will now pay 23.25 cents per share compared with the 22.75 cents paid earlier. This marks 3.1% growth compared to the February 2019 payment.
The increased dividend will be paid on Feb 14, to shareholders on record as of Feb 3, 2020. The latest dividend rate marks an annualized amount of $2.79 per share versus the prior rate of $2.73 per share. Based on the company’s share price of $74.96 on Jan 14, it results in a dividend yield of around 3.72%.
Solid dividend payouts are the biggest enticement for REIT investors and Realty Income remains committed to boosting shareholder wealth. The company enjoys a trademark of the phrase “The Monthly Dividend Company”.
The latest hike comes by a marginal figure from the prior dividend paid, but marks the company’s 595 consecutive monthly dividend payments throughout its 51-year operating history. Moreover, the company has made 89 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.
The latest hike reflects Realty Income’s ability to generate solid cash-flow growth through its operating platform and high-quality portfolio. With a current cash-flow growth rate of 3.39%, ahead of the industry’s average of 3.10%, the increased dividend is likely to be sustainable.
Furthermore, Realty Income has modest leverage, robust liquidity, and continued access to attractively-priced equity and debt capital. The company’s $3.25-billion unsecured credit facility comprises a $3-billion revolving credit facility and a $250-million term loan. It ended third-quarter 2019 with full availability on this $3-billion revolving credit facility, $236 million of cash on hand, and a net debt-to-EBITDA ratio of 5.0x. Realty Income also has a well-laddered debt maturity schedule.
Admittedly, dwindling mall traffic, store closures and bankruptcy of retailers kept retail REITs on tenterhooks, forcing structural changes. Even the likes of Simon Property Group, Inc. (SPG - Free Report) , Kimco Realty Corporation (KIM - Free Report) and Macerich Company (MAC - Free Report) were not immune and have made aggressive attempts to adapt to the changing scenario.
Realty Income has, however, continued to differentiate itself by deriving majority of its annualized retail rental revenues from tenants belonging to service, non-discretionary and low-price retail business. Such businesses are less susceptible to economic recessions, as well as competition from Internet retailing.
Realty Income currently carries a Zacks Rank #3 (Hold). Over the trailing 12-month period, shares of the company have outperformed the industry. While the stock has appreciated 15.7%, the industry has gained 8.4% during this period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q3 2019, while the S&P 500 gained +39.6%, five of our strategies returned +51.8%, +57.5%, +96.9%, +119.0%, and even +158.9%.
This outperformance has not just been a recent phenomenon. From 2000 – Q3 2019, while the S&P averaged +5.6% per year, our top strategies averaged up to +54.1% per year.
See their latest picks free >>