Realty Income (NYSE: O) is one of the most popular real estate investment trusts, or REITs, in the stock market. Since REITs are best known for their income potential, here are the key facts investors need to know about Realty Income's dividend payout -- past, present, and future.
What is Realty Income's dividend?
Let's start with the easy answer. Realty Income currently pays dividends at a $3.16 annualized rate, paid in monthly installments. So, if you own the stock, you can expect one-twelfth of this amount to arrive in your brokerage account each month.
Dividend yield depends on stock price, which at Tuesday's close was $52.76. That puts Realty Income stock's dividend yield at 5.98%. This value will, of course, fluctuate a little once markets open on Wednesday.
Realty Income's dividend payout ratio
REITs are required to distribute, or pay out, most of their income to shareholders. Net income, or the traditional metric used to calculate earnings per share, doesn't translate well for real estate companies. A better metric is funds from operations, or FFO.
REITs generally pay anywhere from 70%-90% of their FFO. Realty Income generated adjusted FFO of $4.00 per share in 2023, and the current dividend yield translates to a 79% FFO payout ratio. This falls right in the middle of what we could consider the healthy range for REIT payouts.
Dividend history
Not only does Realty Income have a dividend yield of about 6%, it has a fantastic track record of increasing its payout. In fact, Realty Income has increased its dividend for 107 consecutive quarters at an annualized dividend growth rate of 4.3%.
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Matt Frankel has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
