Dividend Growth Stock Overview: Realty Income Corporation

Rent from Walgreens Stores provided more than 5% of Realty Income's
revenue in 2014.
Photo courtesy Mike Mozart/flickr.com.

About Realty Income

Realty Income Corporation is a real estate investment trust (REIT) that specializes in retail and commercial properties.  The company was founded in 1969 and was listed on the NYSE in 1994.  Since then, Realty Income – which bills itself as “The Monthly Dividend Company” – has paid dividends every month and increased them multiple times each year.

The company owns over 4,300 properties, consisting of over 70 million square feet of retail space.  The properties are leased to over 230 different commercial tenants across 47 industries, and are located in 49 of the 50 states and Puerto Rico.

Realty Income generally invests in freestanding, commercially zoned, single tenant properties.  Of the company’s current investments, all but 19 are single tenant properties.  The company’s tenants are diversified, with the largest contributor – Walgreens Stores – providing more than 5% of total revenues.  Overall, drug stores, dollar stores and convenience stores each provide approximately 10% of total rental revenue.

The company is a member of the S&P 500 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol O.

As a member of the S&P 500 index, Standard & Poor’s should designate Realty Income as an S&P 500 Dividend Aristocrat once the company has raised dividends for 25 consecutive years. I believe that Realty Income will continue to raise dividends going forward, which means that it should become an S&P Dividend Aristocrat at the beginning of 2021.

Realty Income’s Dividend and Stock Split History

As mentioned above, Realty Income identifies itself as “The Monthly Dividend Company”.  The company states that its primary objective is to “generate dependable monthly cash dividends”.  Realty Income has done just that since its founding in 1969.  The company generally increases dividends 4 – 5 times a year, but not on a regular schedule.

Realty Income has compounded its payout at an average rate of 7.4% over the last 5 years and 5.0% over the last 10 years.

With regards to stock splits, Realty Income split its stock only once – a 2-for-1 split in December 2004.

Realty Income’s Direct Purchase and Dividend Reinvestment Plans

Realty Income Corporation established direct purchase and dividend reinvestment plans in March 2011. You do not need to be a current shareholder to participate in the plans. If you aren’t a current shareholder you must invest a minimum of $1,500, either in a single purchase or in 15 monthly purchases of at least $100. The plan allows for full and partial reinvestment of your dividends.

Aside from the high initial investment that’s required, the plans are favorable for participants. The only fee on purchases is a $5 set up fee for people who don’t currently participate in any dividend reinvestment plans administered by Wells Fargo. Realty Income covers all other fees on stock purchases.

When you sell the shares in your plan, you’ll pay a transaction fee of between $15 and $30 (depending on the type of sell order), and a commission of 12 cents per share. There’s also a $5 fee to have the sale proceeds electronically deposited to your account.

Helpful Links

Realty Income’s Investor Relations Website

Current quote and financial summary for Realty Income (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Realty Income

 

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