REIT Realty Income Among Elite Dividend Payers

By
A A A

Many companies take pride in raising their dividend every year without a single miss.

Real estate investment trust (REIT)Realty Income ( O ), however, can point to increasing its dividend in each of the past 66 quarters.

Yes, that's no typo: The Escondido, Calif.-based company has raised its dividend every quarter for more than 16 years.


Also, Realty Income pays its dividend monthly rather than quarterly, a feature that many retirees prefer.

The company has 4,200 properties in 49 states and Puerto Rico. The holdings are diversified across 47 industries. Most tenants operate retail stores providing nondiscretionary goods and services.

Five tenants accounted for a total of 25% of rental revenue as of March 31:Walgreen ( WAG ),FedEx ( FDX ),Dollar General ( DG ), LA Fitness andFamily Dollar ( FDO ).

Most leases are net leases. In other words, tenants pay rent every month but are responsible for taxes, insurance and maintenance. Leases typically run for 10 to 20 years.

The occupancy rate since 1992 has varied from a low of 96.6% in 2010 to a high of 99.5% in 1998. Last year, the occupancy rate was 98.2% -- the highest since 2006.

As a REIT, Realty Income pays no federal income taxes as long as the company pays 90% of taxable income as dividends.

The payout on Monday will be to shareholders of record June 2. Shareholders will receive fractionally more than 18 cents a share. The annualized payout is about $2.19 a share for a current yield of 5%.

In Q1, funds from operations rose 7% while revenue increased 26%.

Family Dollar recently announced a plan to close about 5% of its older and smaller-format stores. However, Realty Income CEO John Case said at the May conference call that the effect on Realty will be "nonexistent to minimal." Realty doesn't own the older Family Dollar sites, and the average lease term on Family Dollar is 13 years. Even if the stores closed, rent payments would continue.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: O , WAG , FDX , DG , FDO

Investor's Business Daily

Investor's Business Daily

More from Investor's Business Daily:

Related Videos

Stocks

Referenced

100%
100%
77%
89%
70%

Most Active by Volume

33,110,376
  • $113.99 ▲ 1.77%
25,034,179
    $17.98 unch
24,486,872
  • $7.41 ▲ 2.07%
20,864,535
  • $7.39 ▼ 2.76%
18,600,501
  • $8.30 ▼ 0.36%
17,530,211
  • $8.14 ▲ 3.17%
17,299,208
  • $93.79 ▲ 2.74%
14,669,760
  • $25.78 ▼ 0.19%
As of 12/26/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com