Realty Income (O) is one of the highest-quality and best-run REITS on the market, observes Tom Hutchinson, income expert and editor of Cabot Dividend Investor.
The REIT has operated for over 51 years and currently has 6,500 properties rented to 600 different tenants in 49 states, Puerto Rico and the United Kingdom.
An investor would be hard pressed to find a more reliable dividend payer and grower than this exceptional REIT. Realty has paid 604 consecutive dividends throughout its 51-year operating history dating back to 1969.
And the monthly payout has been raised 92 times during that period. This is a rare monthly dividend payer with some serious stamina and staying power.
How do they do it? The company buys established properties with a proven record of profitability and rents them to high quality tenants.
The business model is to generally use a “sale-leaseback” arrangement whereby Realty Income purchases the property from the tenant and then the company remains there and pays rent under long term leases of 10 to 20 years.
The pandemic has not been kind to the REIT sector. Realty Income is still down 25% from the 52-week high in February. But the operational performance is way more solid than that selloff indicates.
In the first nine months of this year, revenues are actually 20% higher and earnings per share are actually up 3.7% over the same period last year. In October, Realty collected 93% of the contracted rents in the overall portfolio, which was enough to put earnings in the positive column.
Realty Income currently yields 4.6%. After a year that has dragged much of the REIT sector down, ahead of what is likely to be a powerful recovery, this REIT represents a fantastic buying opportunity for a stock that is rarely cheap.
