Looking for a place to park funds amid uncertainty in the market? Consider real estate investment trustRealty Income ( O ).
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 quarter.
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.
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