Realty Income (NYSE: O) stands as a beacon among Dividend Aristocrats, boasting an impressive streak of raising dividends for 29 consecutive years. This real estate investment trust (REIT) has not only weathered the storms of economic volatility but has thrived, earning its nickname as “The Monthly Dividend Company” for its consistent monthly pay outs since 1994.
Funds from operations (FFO), a crucial metric for REITs measuring their cash flow, has a positive trend. FFO more than doubled since 2021 and poised to rise further in the coming year.
Particularly reassuring for investors is the alignment between the rising dividend pay outs and the robust FFO growth. The company is forecasted to pay shareholders $2.2 billion this year, equivalent to 85% of its FFO. Looking ahead, the pay out ratio is projected to decrease to 70% in the next year, a testament to Realty Income’s commitment to maintaining financial stability.
Realty Income’s ability to consistently raise dividends while ensuring that FFO outpaces these increases underscores the company’s financial prudence. With a pay out ratio of 70%, shareholders can be confident that for every dollar of cash flow generated, $0.70 will be devoted to dividends.
In conclusion, Realty Income’s track record and financial indicators suggest that the 6% yield it currently offers is not just tempting but also secure. The company’s commitment to maintaining a healthy pay out ratio, coupled with its impressive dividend-raising history, positions Realty Income as a reliable choice for income-focused investors.
There’s a lot to like about Realty Income, and its Perpetual Dividend Raiser status remains intact, making it a compelling option for those seeking stability and income in their investment portfolios.
Sven Franssen