Realty Income: Dividends Every Month

06/18/2014 8:00 am EST


Charles Carlson

Editor, DRIP Investor

One way to ensure a dividend payment every month is to own one of the few companies that pays monthly dividends; one such company is our latest recommendation, a REIT that has paid a dividend for 527 consecutive months, explains Chuck Carlson, editor of DRIP Investor.

Realty Income (O) has paid a dividend for 527 consecutive months throughout its 45-year operating history. The company has increased the dividend 75 times since the firm's listing on the New York Stock Exchange in 1994.

Operationally, the company has made huge investments that should drive growth over the next few years.

Realty Income generates cash flow from over 4,200 commercial properties that it owns under long-term leases, primarily with large commercial enterprises that operate multiple locations.

In the first quarter of 2013, the firm purchased 515 properties from American Realty Capital Trust for $3.2 billion. In the first quarter of 2014, the firm invested nearly $657 million in 337 new properties.

Funds from operations (FFO) available to shareholders—an important metric for REITs—increased nearly 30% in the quarter to $134.5 million. FFO per share was up more than 8% in the quarter.

Annualizing the most recent monthly dividend gives these shares an annual payout of $2.19 per share. That translates to a 5% yield. Please note that REIT dividends are not usually considered “qualified” dividends and thus are typically taxed at an investor's ordinary income tax rate.

Realty Income offers a direct-purchase plan for initial purchases. The firm's plan includes a discount option whereby the firm, at its discretion, may grant, under certain circumstances, a discount of up to 1.25% on shares purchased through the plan.

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