Realty Income Corporation (O - Free Report) recently announced its 106th common stock monthly dividend hike, since the company’s NYSE listing in 1994. The company will now pay 23.30 cents per share compared with the 23.25 cents paid earlier.
The increased dividend will be paid on Apr 15, to shareholders on record as of Apr 1, 2020. The latest dividend rate marks an annualized amount of $2.796 per share versus the prior rate of $2.79 per share. Based on the company’s share price of $55.12 on Mar 17, it results in a dividend yield of around 5.07%.
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”.
The latest hike comes by a marginal figure from the prior dividend paid but marks the company’s 597 consecutive monthly dividend payments throughout its 51-year operating history. Moreover, the company has made 90 consecutive quarterly dividend hikes, which is encouraging. In fact, this retail REIT has witnessed compound average annual dividend growth of 4.5% 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 12.23%, ahead of the industry’s average of 1.70%, the increased dividend is likely to be sustainable.
Moreover, the company recently closed 9 million common stock offering, leading to net proceeds after underwriting discounts and commissions of $677 million. The company plans to use the proceeds to repay borrowings outstanding under its $3-billion unsecured revolving credit facility. It also has a well-laddered debt maturity schedule
Notably, decreasing mall traffic, store closures and retailer bankruptcies have been causes of concern for retail REITs, 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 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 e-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 been down 21.4%, the industry has declined 32.6% during this period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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