Looking for a place to park funds amid uncertainty in the
market? Consider real estate investment trustRealty Income (
Funds from operations (FFO) held steady even during the
2008-09 recession and have now increased for three straight
years. FFO for this year is seen rising 8% to $2.61 a share
followed by a 4% gain in 2015.
The Escondido, Calif.-based company owns 4,200 commercial
properties in the U.S. and Puerto Rico. It leases those
properties to well-established businesses in 47 industries,
including distributors and retailers such as health and fitness
centers, drugstores and dollar stores.
The properties are leased for 10 to 20 years, giving the
company a steady stream of income that allows Realty Income to
make monthly payments to investors.
As a REIT, Realty Income pays no federal income taxes as long
as it pays 90% of taxable income as dividends. The company has
increased its dividend every quarter for more than 16 years.
The current annual payout is $2.19 a share. That yields 5% at
the current share price, far above the S&P 500 average of
1.93%. Meanwhile, the stock has risen about 19% this year, nearly
quadruple the S&P's 5% gain. It climbed back above its 50-day
moving average on Wednesday.
On July 24, Realty Income reported that Q2 adjusted FFO rose
8% to 64 cents a share from the same period last year, in line
with analysts' forecasts and better than the 7% gain in the prior
Revenue for the period climbed 23%. Revenue had risen between
26% and 72% over the prior four quarters but now seems to have
slowed to its longer-term trend .
Results in the latest quarter were boosted by rent increases
and the acquisition of 73 new properties. The company said that
its occupancy rate edged up to 98.3% from 98.2% in the same
period last year.