Markets
O

Will Realty Income Corporation Raise Its Dividend in 2016?

Source: Realty Income.

Furthermore, Realty Income's tenants sign long-term net leases, meaning that the tenant is responsible for variable costs such as taxes, insurance, and building maintenance. Thanks to the nature of these businesses, tenant retention isn't a big problem, and these factors have combined to produce a 98.3% occupancy rate.

Projected growth in 2016

Realty Income projects that its funds from operations (FFO) per share will fall in the range of $2.82 to $2.89 for 2016. (FFO is the "earnings" of the REIT world. If you'd like more information on FFO and other REIT metrics, check out this slideshow .) At the midpoint, this represents a 4% increase over 2015's projected full-year FFO, which itself represents an increase of about 6.4% over 2014's results.

Steady growth in FFO per share has allowed Realty Income to increase its dividend at an average annual rate of 4.6% since its 1994 IPO.

While the dividend has grown at an impressive pace, the payout is only part of the Realty Income investment thesis. Because property values tend to increase over time, this stock's combination of growth and income has produced a phenomenal 16.6% annualized total return since the IPO. To put this kind of sustained performance in perspective, a $10,000 investment in Realty Income's IPO would be worth more than $250,000 today, 21 years later.

There's more than one dividend raise coming in 2016

Realty Income is unusual in that it pays dividends on a monthly basis and increases its payout each quarter. Shareholders should expect not one, but four dividend increases in 2016, combining for an increase in the 3% to 5% range if the company's history and FFO projections are any indicator.

Stocks that combine consistent dividend growth with long-term upside potential are the Holy Grail of long-term investing, and it's tough to find one that does it better than Realty Income. An investment in Realty Income has risks , just as any other stock does, but I see no reason whatsoever to think that the company's outstanding streak of dividend increases will be in jeopardy anytime soon.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Will Realty Income Corporation Raise Its Dividend in 2016? originally appeared on Fool.com.

Matthew Frankel owns shares of Realty Income.. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. 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.


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

In This Story

O

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More